Juneau: June 3, 2026 Assembly Finance Committee

Thank you, Madam Chair, and thank you for the presentation. I'm curious, do you believe that the implementation of an online checkbook, much like the state does for expenditures between departments on a more regular basis would help with any of these deficiencies?

35:46

I would honestly have to know more information about what exactly, how it works and everything before, but I think a lot of the issue isn't the recording of the day-to-day transactions like the accounts payable checks, the payroll checks. We don't have— we haven't had findings related to processing transactions at that level. It really comes back to preparing for the audit and at year-end looking at the information that's been recorded during the year and reconciling and making sure that it is in accordance with generally accepted accounting principles as far as how it's being reported in your financial statements. So a lot of times governments will account for things on a budgetary basis because that's how you're monitoring how you're doing. But for financial reporting, sometimes things have to be reclassified in a different format, and so it puts a lot of pressure on finance because they're having to report for it one way, you know, budget basis for a lot of internal reporting.

35:46

I would honestly have to know more information about what exactly, how it works and everything before, but I think a lot of the issue isn't the recording of the day-to-day transactions like the accounts payable checks, the payroll checks. We don't have— we haven't had findings related to processing transactions at that level. It really comes back to preparing for the audit and at year-end looking at the information that's been recorded during the year and reconciling and making sure that it is in accordance with generally accepted accounting principles as far as how it's being reported in your financial statements. So a lot of times governments will account for things on a budgetary basis because that's how you're monitoring how you're doing. But for financial reporting, sometimes things have to be reclassified in a different format, and so it puts a lot of pressure on finance because they're having to report for it one way, you know, budget basis for a lot of internal reporting.

36:50

But when it comes down to the financial statements and the, the numbers that we're auditing, it does need to be in accordance with GASB reporting. So I know that doesn't exactly answer your question, but I think Any improvement that moves things to a more automated way that provides easier reconciliation and easier access to looking at records would help. Would help. Thank you. Ms. Hughes-Candies.

36:50

But when it comes down to the financial statements and the, the numbers that we're auditing, it does need to be in accordance with GASB reporting. So I know that doesn't exactly answer your question, but I think Any improvement that moves things to a more automated way that provides easier reconciliation and easier access to looking at records would help. Would help. Thank you. Ms. Hughes-Candies.

37:22

Thanks, Madam Chair. Thank you for this and for your work on it. I have, I guess, some questions about the timing challenges because Ben here, you know, we've been each year, I hear it's improving a bit and appreciate that. But it's still, you know, we're not hitting kind of our targets there. I guess my— it's as a two-part question, the federal compliance supplement being issued late.

37:22

Thanks, Madam Chair. Thank you for this and for your work on it. I have, I guess, some questions about the timing challenges because Ben here, you know, we've been each year, I hear it's improving a bit and appreciate that. But it's still, you know, we're not hitting kind of our targets there. I guess my— it's as a two-part question, the federal compliance supplement being issued late.

37:58

Is that an annual piece that, you know, especially with the historic look back, it looks like there was another kind of outlier year. Is there a month that that is typically issued? And I understand that that holds the— holds the opinion up, but is it accurate to say then the Federal Compliance Supplement being issued late, like that's completely outside of CBJ's control? Go ahead and respond. Yes, unfortunately, the issuance of the compliance supplement is totally out of CBJ's control, and it typically— typically, it's, it's been very non-typical for about the past 5 years, but it used to always come out kind of in July timeframe, maybe August, and it's, it's honestly been all over the place the last few years.

37:58

Is that an annual piece that, you know, especially with the historic look back, it looks like there was another kind of outlier year. Is there a month that that is typically issued? And I understand that that holds the— holds the opinion up, but is it accurate to say then the Federal Compliance Supplement being issued late, like that's completely outside of CBJ's control? Go ahead and respond. Yes, unfortunately, the issuance of the compliance supplement is totally out of CBJ's control, and it typically— it's been very non-typical for about the past 5 years, but it used to always come out kind of in July timeframe, maybe August, and it's honestly been all over the place the last few years.

38:54

And so what it is, is the compliance supplement essentially is for the different federal program. It's the guidance that the federal agencies are providing to us, the auditors, on how they want us to audit those programs. And so while we can look to last year's compliance supplement to see how did they want us to audit this last year, we have to wait till we have the current one in case there's been changes to recommended audit procedures. A lot of times the federal Agencies may change it based on, you know, changes in their funding or new conditions of grants. Okay, great.

38:54

And so what it is, is the compliance supplement essentially is for the different federal program. It's the guidance that the federal agencies are providing to us, the auditors, on how they want us to audit those programs. And so while we can look to last year's compliance supplement to see how did they want us to audit this last year, we have to wait till we have the current one in case there's been changes to recommended audit procedures. A lot of times the federal Agencies may change it based on, you know, changes in their funding or new conditions of grants. Okay, great.

39:32

And then the follow-up. Go ahead. And then the area I'm looking at the FY25 timing challenges slide. So the bullet points for the areas not ready at the beginning of audit, there's, you know, bullet pointed out. Um, several pieces that were not fully reviewed, reconciled.

39:32

And then the follow-up. Go ahead. And then the area I'm looking at the FY25 timing challenges slide. So the bullet points for the areas not ready at the beginning of audit, there's, you know, bullet pointed out. Um, several pieces that were not fully reviewed, reconciled.

39:55

You have listed the sort of two different times of the year.

39:55

You have listed the sort of two different times of the year.

40:00

That you're actively working with CBJ. What is a gold standard for that? Like, at what point would— if we're hitting the mark, should those all be reconciled and reviewed? There are different target dates based on the different kind of accounts or types of activity, and unfortunately everything overlaps. So for example, your capital projects get reconciled, which overlaps with your grants being reconciled because many of your capital projects are grant funded.

40:00

That you're actively working with CBJ. What is a gold standard for that? Like, at what point would— if we're hitting the mark, should those all be reconciled and reviewed? There are different target dates based on the different kind of accounts or types of activity, and unfortunately everything overlaps. So for example, your capital projects get reconciled, which overlaps with your grants being reconciled because many of your capital projects are grant funded.

40:35

And so again, it's— and Angie may want to address this question, but I can tell you that the finance department reorganized itself in how they've assigned work out. And one of that is so that you're not relying on one person to do that work. Instead, accountants are all working on specific departments or specific grants. And so I will say for this year's audit, a lot of— even though these were bullet pointed as not being fully ready, the majority of the work on them was. And then some of it was finding, like, the variable leases caused us to kind of hand it back to CBJ and say, oh, you need to do some additional work on this, right?

40:35

And so again, it's— and Angie may want to address this question, but I can tell you that the finance department reorganized itself in how they've assigned work out. And one of that is so that you're not relying on one person to do that work. Instead, accountants are all working on specific departments or specific grants. And so I will say for this year's audit, a lot of— even though these were bullet pointed as not being fully ready, the majority of the work on them was. And then some of it was finding, like, the variable leases caused us to kind of hand it back to CBJ and say, oh, you need to do some additional work on this, right?

41:18

And so when that happens,, it kind of gets pushed back. Um, the timeline that we like to do, um, is some of it relates to accounting rules. Um, for example, um, your accounts receivable really can't be finished until 2 months after your end, because what the accounting rules say is that you can look at collections for 2 months after your end, and that's what you can base your, uh, revenue recognition on for certain types of your revenue. And so Essentially, finance has to wait till August 1st before they can really even move forward, essentially, with parts of preparing. And so again, as I mentioned, everything kind of overlaps.

41:18

And so when that happens,, it kind of gets pushed back. Um, the timeline that we like to do, um, is some of it relates to accounting rules. Um, for example, um, your accounts receivable really can't be finished until 2 months after your end, because what the accounting rules say is that you can look at collections for 2 months after your end, and that's what you can base your, uh, revenue recognition on for certain types of your revenue. And so Essentially, finance has to wait till August 1st before they can really even move forward, essentially, with parts of preparing. And so again, as I mentioned, everything kind of overlaps.

42:03

And so I can tell you there's a very aggressive, which I thought was very good, schedule laid out for FY26. And we also had a schedule for FY25, which was largely met by the time we got to Um, December, um, we were really waiting for Bartlett was a big part of it. There was the lease issue that we were still diving into and getting details on. Um, but due to kind of our schedule and finances focus, you know, once, once you're kind of out of that audit time period, obviously your time gets caught up with other things. For us, it's that we have pre-scheduled other work, other clients, and so things slow down when we get outside of the pre-scheduled time period that we had scheduled to do the audit.

42:03

And so I can tell you there's a very aggressive, which I thought was very good, schedule laid out for FY26. And we also had a schedule for FY25, which was largely met by the time we got to Um, December, um, we were really waiting for Bartlett was a big part of it. There was the lease issue that we were still diving into and getting details on. Um, but due to kind of our schedule and finances focus, you know, once, once you're kind of out of that audit time period, obviously your time gets caught up with other things. For us, it's that we have pre-scheduled other work, other clients, and so things slow down when we get outside of the pre-scheduled time period that we had scheduled to do the audit.

42:54

And so a lot of it was we got as far as we could, and then we had just had to wait and finish up the audit once we had the missing pieces.

42:54

And so a lot of it was we got as far as we could, and then we had just had to wait and finish up the audit once we had the missing pieces.

43:05

Okay, thanks. So there's not like— I mean, knowing that about the— I understand it's all the overlapping, but it's not like And I— some of this we can maybe talk about offline, but it's not sort of like similar to when you would expect the federal compliance supplement. It's not, you know, when we get to September, it's reasonable to expect all of that should be fully done. In a perfect world. In a perfect world, it's really mid-October is when the books should be closed.

43:05

Okay, thanks. So there's not like— I mean, knowing that about the— I understand it's all the overlapping, but it's not like And I— some of this we can maybe talk about offline, but it's not sort of like similar to when you would expect the federal compliance supplement. It's not, you know, when we get to September, it's reasonable to expect all of that should be fully done. In a perfect world. In a perfect world, it's really mid-October is when the books should be closed.

43:40

Closed, and at that point, essentially all the significant adjustments are done, and we are provided essentially what we need to do the audit, and we do our audit work in mid-October to mid-November. That was the timeframe that we've used for several years, and then the ACFR draft was typically ready kind of in the middle of that. So typically by November 1st, with a kind of final draft around Thanksgiving time, and that allowed about 3 weeks before we tried to issue in mid-December to late December. And that was the timeframe that was followed for many years, essentially until COVID hit, and then we started running into delays in various, you know, the supplement being late or finding significant accounts that needed additional work that slowed things down. Okay, thanks.

43:40

Closed, and at that point, essentially all the significant adjustments are done, and we are provided essentially what we need to do the audit, and we do our audit work in mid-October to mid-November. That was the timeframe that we've used for several years, and then the ACFR draft was typically ready kind of in the middle of that. So typically by November 1st, with a kind of final draft around Thanksgiving time, and that allowed about 3 weeks before we tried to issue in mid-December to late December. And that was the timeframe that was followed for many years, essentially until COVID hit, and then we started running into delays in various, you know, the supplement being late or finding significant accounts that needed additional work that slowed things down. Okay, thanks.

44:40

Mayor Walden, uh, thank you. This is a little bit aligned with Ms. Yuskany's question. Are we confident that we have a coordination with BRH's auditing firm that we're going to be more on time? Because I know there's a little bit of overlap on there, back and forth between us and them. And are we confident that that's going to look a little smoother this year?

44:40

Mayor Walden, uh, thank you. This is a little bit aligned with Ms. Yuskany's question. Are we confident that we have a coordination with BRH's auditing firm that we're going to be more on time? Because I know there's a little bit of overlap on there, back and forth between us and them. And are we confident that that's going to look a little smoother this year?

45:04

I'll let Angie answer if that's okay. Uh, thank you for the question, Mayor Walden. Um, I, I am hopeful. I'm not going to quite say confident, um, that we will have, um, a much better experience this year. Um, you know, Bartlett had a lot of staff turnover, um, and so the staff that they have today worked through the end of the close and the audit last year, so they've, they've got some experience of the Bartlett CBJ world.

45:04

I'll let Angie answer if that's okay. Uh, thank you for the question, Mayor Walden. Um, I, I am hopeful. I'm not going to quite say confident, um, that we will have, um, a much better experience this year. Um, you know, Bartlett had a lot of staff turnover, um, and so the staff that they have today worked through the end of the close and the audit last year, so they've, they've got some experience of the Bartlett CBJ world.

45:37

Also, the auditor that's working with them has a year of experience, and that first year is hard. And Bartlett is, at the end of the day, one department within the City and Borough of Juneau, and it's not its own organization, and it doesn't have its own books. And I think that caused some hardship in trying to figure out how to tie things out, maybe differently than that auditor had experience with. And that's my reading between the lines of the types of questions that we got. We do have a meeting— goodness, is it next week or the week after— with the Bartlett finance team and with their auditor, and we've invited Ms. Tarver to join us as well just like, let's, let's get together.

45:37

Also, the auditor that's working with them has a year of experience, and that first year is hard. And Bartlett is, at the end of the day, one department within the city and borough of Juneau, and it's not its own organization, and it doesn't have its own books. And I think that caused some hardship in trying to figure out how to tie things out, maybe differently than that auditor had experience with. And that's my reading between the lines of the types of questions that we got. We do have a meeting— goodness, is it next week or the week after?— with the Bartlett finance team and with their auditor.

46:23

And we've invited Ms. Tarver to join us as well just like, let's, let's get together. We, we know where we had issues last year. How do we, how do we make sure we don't kind of run into those, those same, um, challenges and, um, kind of get ahead of that game? Um, so I, I think all of those things combined will position us to, to be in a much better position, um, going forward for this year.

46:29

We, we know where we had issues last year. How do we, how do we make sure we don't kind of run into those, those same, um, challenges and, um, kind of get ahead of that game? Um, so I, I think all of those things combined will position us to, to be in a much better position, um, going forward for this year.

46:53

Mr. Kelly, thank you. I was looking at the slide about, uh, one of the slides about the uncorrected and, and corrected misstatements. So specifically, it's on page 84 of our packet, but I was looking at, you know, the $8.6 million, um, in overstatements in lease receivables and deferred inflows, and I was looking at the $2.7 million calculation error with hotel tax. And I was just wondering, how does that affect what we see on the assembly? Is the overall balance affected?

46:53

Mr. Kelly, thank you. I was looking at the slide about, uh, one of the slides about the uncorrected and, and corrected misstatements. So specifically, it's on page 84 of our packet, but I was looking at, you know, the $8.6 million, um, in overstatements in lease receivables and deferred inflows, and I was looking at the $2.7 million calculation error with hotel tax. And I was just wondering, how does that affect what we see on the assembly? Is the overall balance affected?

47:35

Is it just buckets might be in different places than where they're supposed to be? Would you be able to explain that?

47:35

Is it just buckets might be in different places than, than where they're supposed to be? Would you be able to explain that?

47:42

Um, for the lease receivable and deferred inflows, those— one is an asset and one's a liability, so those show up on the balance sheet. And so the actual revenue that's being recognized from those leases was materially correct. It was more just the projected future amounts that you were going to get, and then you're not able to recognize the revenue until you get it. So that was the deferred inflow part. So again, with your internal, um, reports a little bit more focused on budget-to-actual income statement, um, that's probably why the balance sheet amount wasn't popping out at someone.

47:42

For the lease receivable and deferred inflows, those— one is an asset and one's a liability, so those show up on the balance sheet. And so the actual revenue that's being recognized from those leases was materially correct. It was more just the projected future amounts that you were going to get, and then you're not able to recognize the revenue until you get it. So that was the deferred inflow part. So again, with your internal, um, reports a little bit more focused on budget to actual income statement, um, that's probably why the balance sheet amount wasn't popping out at someone.

48:24

And then the other adjustment, the accrual for the sales tax and hotel tax, that one, my honest opinion, I feel like should have jumped out at someone because how we detected it, which I'm giving away our secrets here, but is we do a comparison. So we have several years' worth of data and we're looking at it to see like, oh, what's going up, what's going down? And all of a sudden it went up. And so we kind of dug into it further of like, wait a minute, why'd this go up? And, and so working back through the reconciliation, essentially found that a cell in a spreadsheet was essentially linked incorrectly.

48:24

And then the other adjustment, the accrual for the sales tax and hotel tax, that one, my honest opinion, I feel like should have jumped out at someone because how we detected it, which I'm giving away our secrets here, but is we do a comparison. So we have several years' worth of data and we're looking at it to see like, oh, what's going up, what's going down? And all of a sudden it went up. And so we kind of dug into it further of like, wait a minute, why'd this go up? And, and so working back through the reconciliation, essentially found that a cell in a spreadsheet was essentially linked incorrectly.

49:07

And I think that would have probably been detected eventually. And, and that's where it's always hard with the audit and the financial statement preparation coming kind of after a lot of the work is done on the audit is that, you know, Angie and her team, once they have that audit in front of them and they can look at it, it probably would have popped out at someone there of like, wait a minute, why did this go up? And, but again, when you're just working on the reconciliation, you're getting it done, you're like, okay, looks good, my numbers agree, and and it— they move on. And so I think building in more self-checks and reviews of internally prepared reconciliations. And also we have changed— CBJ will have access to the software that we're using to prepare their financial.

49:07

And I think that would have probably been detected eventually. And, and that's where it's always hard with the audit and the financial statement preparation coming kind of after a lot of the work is done on the audit is that, you know, Angie and her team, once they have that audit in front of them and they can look at it, it probably would have popped out at someone there of like, wait a minute, why did this go up? And, but again, when you're just working on the reconciliation, you're getting it done, you're like, okay, looks good, my numbers agree, and and it— they move on. And so I think building in more self-checks and reviews of internally prepared reconciliations. And also we have changed— CBJ will have access to the software that we're using to prepare their financial.

50:00

Statements, and so they'll be able throughout this year as they're working on preparing for the audit, be able to look in to see, oh, how does this, you know, I post an adjustment, how does that flow through and show up in the financial statements? And so we feel like that should address a lot of those kind of things of having that higher-level ability to look at it before it's kind of provided to us as being final numbers. Thank you. And Miss Flick can probably add on to how that affects our— what we see when we, um, prepare the budget. Um, Mr. Kelly, that was a great question.

50:00

Statements, and so they'll be able throughout this year as they're working on preparing for the audit, be able to look in to see, oh, how does this, you know, I post an adjustment, how does that flow through and show up in the financial statements? And so we feel like that should address a lot of those kind of things of having that higher-level ability to look at it before it's kind of provided to us as being final numbers. Thank you. And Miss Flick can probably add on to how that affects our— what we see when we, um, prepare the budget. Um, Mr. Kelly, that was a great question.

50:40

Thank you. Um, none of what you see presented, um, today impacted your budget information, your fund balance information. Um, so all of, all of, all the fund balance that you've been watching change, um, that already had, um, been corrected and, and these adjustments cared for. So, um, no, I'm sorry, Mayor, we didn't just find $2.7 million. Thank you, Miss Hall.

50:40

Thank you. Um, none of what you see presented, um, today impacted your budget information, your fund balance information. Um, so all of, all of, all the fund balance that you've been watching change, um, that already had, um, been corrected and, and these adjustments cared for. So, um, no, I'm sorry, Mayor, we didn't just find $2.7 million. Thank you, Miss Hall.

51:11

Yeah, thank you. Um, I'm looking at, um, page 8 of the letter to the assembly in the finance and accounting policies and procedures. GASB Statement Number 103, Financial Reporting Model Improvements Effective in Fiscal Year 2026, will require dedicated time and resources to ensure it's accurately implemented for your end reporting. Can you speak a bit more to what the time and resources, you know, do we need to beef up our accounting department? What does that look like?

51:11

Yeah, thank you. Um, I'm looking at, um, page 8 of the letter to the assembly in the finance and accounting policies and procedures. GASB Statement Number 103, Financial Reporting Model Improvements Effective in Fiscal Year 2026, will require dedicated time and resources to ensure it's accurately implemented for your end reporting. Can you speak a bit more to what the time and resources, you know, do we need to beef up our accounting department? What does that look like?

51:44

Thank you. Thank you, Ms. Hall. With any new accounting standard, some of these can be quite lengthy, and then a lot of times also implementation guides get issued based on the new standard. And so while we're auditing it, it's really up to management to work their way through those standards and ensure that they've made the necessary changes to how they account for things or the controls that they have in place. And so that's really the dedication of time is is carving out that time in, I know, already busy schedules of reading through accounting standards, doing, you know, continuing education on them to understand the impact they're going to have.

51:44

Thank you. Thank you, Ms. Hall. With any new accounting standard, some of these can be quite lengthy, and then a lot of times also implementation guides get issued based on the new standard. And so while we're auditing it, it's really up to management to work their way through those standards and ensure that they've made the necessary changes to how they account for things or the controls that they have in place. And so that's really the dedication of time is is carving out that time in, I know, already busy schedules of reading through accounting standards, doing, you know, continuing education on them to understand the impact they're going to have.

52:28

103 Is primarily related to how information is reported in your ACFR. And so while we assist with that, we will be helping CBJ, but at the same time, CBJ finance staff needs to make sure that they understand the changes that need to be happening and provide us guidance. There's, you know, sometimes there's decision points on do you report it, show it this way or this way, and that's where we'd be looking for guidance from them. So this standard luckily isn't, shouldn't require significant time, but it definitely will require some time. I might follow up with a question for staff, you know, In the years that I've been doing this, you know, it feels like we make 2 steps forward and improving and, you know, maybe 1 step back and then new things come down the pipe.

52:28

103 Is primarily related to how information is reported in your ACFR. And so while we assist with that, we will be helping CBJ, but at the same time, CBJ finance staff needs to make sure that they understand the changes that need to be happening and provide us guidance. There's, you know, sometimes there's decision points on do you report it, show it this way or this way, and that's where we'd be looking for guidance from them. So this standard luckily isn't, um, shouldn't require significant time, but it definitely will require some time. I might follow up with a question for staff, you know, in the years that I've been doing this, you know, it feels like we make two steps forward and improving and, you know, maybe one step back, and then new things come down the pipe.

53:26

In terms of both, like, addressing the material weakness and the reconciliation of accounts that we talked about and the new things coming down the pipe, you know, what do you need But how do you see, you know, what's the plan, and what resources do you need to do that, and how can we support? Thank you for the question, Chair Wall. It does seem that the GASB board is gifting us on a regular basis with new requirements and new ways to do things. As Ms. Tarver mentioned, you know, sometimes they're significant and hard and require lots and lots of resources, and sometimes they're not quite as bad. Um, one of the things that, that we do annually is, um, as we have staff attend the Government Financial Officers Association conference, they have a huge session on all of the changes related to accounting standards, reporting standards, It is large enough that it is held in the same hall as the big general sessions, and it is one of— it gets its own time slot.

53:26

In terms of both, like, addressing the material weakness and the reconciliation of accounts that we talked about and the new things coming down the pipe, you know, what do you need But how do you see, you know, what's the plan, and what resources do you need to do that, and how can we support? Thank you for the question, Chair Wall. It does seem that the GASB board is gifting us on a regular basis with new requirements and new ways to do things. As Ms. Tarver mentioned, you know, sometimes they're significant and hard and require lots and lots of resources, and sometimes they're not quite as bad. Um, one of the things that, that we do annually is, um, as we have staff attend the Government Financial Officers Association conference, they have a huge session on all of the changes related to accounting standards, reporting standards, It is large enough that it is held in the same hall as the big general sessions, and it is one of— it gets its own time slot.

54:47

It's not one of the confined to the normal time section. And then throughout the rest of the conference, there are specific trainings on the standards that have just been released. The ones that you have to implement in the upcoming year, and looking ahead to what GASB is planning on releasing. So we spend a lot of time in those sessions going through the notes, under— trying to understand what it is. We have access through LG Rayfield to other views of that from an auditing perspective and through that lens, and so we, we try to gather and garner all of those pieces.

54:47

It's not one of the confined to the normal time section. And then throughout the rest of the conference, there are specific trainings on the standards that have just been released. The ones that you have to implement in the upcoming year, and looking ahead to what GASB is planning on releasing. So we spend a lot of time in those sessions going through the notes, under— trying to understand what it is. We have access through LG Rayfield to other views of that from an auditing perspective and through that lens, and so we, we try to gather and garner all of those pieces., and work as, as best we can to implement those standards.

55:29

And work as, as best we can to implement those standards. One of the things that we have found is, you know, we are one government across the United States and everybody gets to deal with the same thing. So through other organizations that we're close with, people of about our same size and the same kind of makeup, we can, you know, kind of go back and forth also with our, our peers to figure out how did you solve this thing. We also have some consulting hours that we take advantage of with LG Rayfield when we get somewhere and we're, we're stuck, whether it's a new standard or something else. I would love to tell you that I'd love to double my accounting team.

55:35

One of the things that we have found is, you know, we are one government across the United States, and everybody gets to deal with the same thing. So through other organizations that we're close with, people of about our same size and, and the same kind of makeup, we can, you know, kind of go back and forth also with our, our peers to figure out how did you solve this thing. We also have some consulting hours that we take advantage of with LG Rayfield when we get somewhere and we're, we're stuck, whether it's a new standard or something else. I would love to tell you that I'd love to double my accounting team. I know that that's not realistic.

56:11

I know that that's not realistic. You know, I think we've, we have, since I've been with CBJ and in this position for 3 years, we've had a lot of turnover. And this is a year where, where we're still, we still have a few seats that are turning over, but we've got a lot of stability. And so, you know, I think that we've got really, really smart, dedicated public servants in these accounting roles that are, are doing things. They're— we met a ton of our timelines last year.

56:14

You know, I think we've, we have, since I've been with CBJ and in this position for 3 years, we've had a lot of turnover. And this is a year where, where we're still, we still have a few seats that are turning over, but we've got a lot of stability. And so, you know, I think that we've got really, really smart, dedicated public servants in these accounting roles that are, are doing things. They're— we met a ton of our timelines last year. We have some room for improvement.

56:48

We have some room for improvement. So I, At this point, I don't know that there's a ton that I would ask of the assembly. Um, you have all been very supportive when we have had needs, and so, you know, I continue to work with Manager's Office on how things are going, where we see gaps, and, um, we'll, we'll continue, you know, to kind of to work through that. A couple years ago, we did realize we could not produce our financial statements on our own anymore. We did not have that that bandwidth and that skill set.

56:50

So I, At this point, I don't know that there's a ton that I would ask of the assembly. Um, you have all been very supportive when we have had needs, and so, you know, I continue to work with Manager's Office on how things are going, where we see gaps, and, um, we'll, we'll continue, you know, to kind of to work through that. A couple years ago, we did realize we could not produce our financial statements on our own anymore. We did not have that that bandwidth and that skill set. And so, um, we, you know, contracted, um, quickly for that.

57:20

And so, um, we, you know, contracted, um, quickly for that. We'll be doing an RFP for those services this coming year, um, because I don't see that we're going to have that bandwidth for a while, just with the way staff turns over and the shortage in the accounting field, um, in order to meet the requirements of getting this reporting out. I'd like to get us stabilized with external help as our, our kind of go-forward on that piece. And so yeah, that's, that's kind of where we are and, and, and how we plan to tackle it. Thank you.

57:26

We'll be doing an RFP for those services this coming year, um, because I don't see that we're going to have that bandwidth for a while, just with the way staff turns over and the shortage in the accounting field, um, in order to meet the requirements of getting this reporting out. I'd like to get us stabilized with external help as our, our kind of go-forward on that piece. And so yeah, that's, that's kind of where we are and, and, and how we plan to tackle it. Thank you. Ms. Huskandies.

57:58

Ms. Huescandiz. Thanks, Madam Chair. A kind of related follow-up to that, and then just related to the timing challenges still with the turnover within the finance department. I believe this question is for staff, if I didn't already say I believe the term significant was used, and then I know, again, that's another one where it seems like we're making progress, you know, from a couple years ago, but then maybe now we're back to the same place. So I was just wondering, Ms. Flick, if you could comment on how extensive that's been over the last fiscal year.

58:02

Thanks, Madam Chair. A kind of related follow-up to that, and then just related to the timing challenges still with the turnover within the finance department. I believe this question is for staff, if I didn't already say I believe the term significant was used, and then I know, again, that's another one where it seems like we're making progress, you know, from a couple years ago, but then maybe now we're back to the same place. So I was just wondering, Ms. Flick, if you could comment on how extensive that's been over the last fiscal year. When we say turnover, how, how much, how frequent are we talking about?

58:38

When we say turnover, how, how much, how frequent are we talking about? Thank you for that question, um, Ms. Huskandies. I believe 2 years ago, in an accounting team of 6 people, we had 1 person who had been through the audit previously, and everybody else was new, or we had vacancies. Last year we had, um, 75% of our accountants were, um, brand new. Um, this year we've got more of our accountants than not that have been through the cycle once.

58:46

Thank you for that question, um, Ms. Huskandies. I believe 2 years ago, in an accounting team of 6 people, we had 1 person who had been through the audit previously, and everybody else was new, or we had vacancies. Last year we had, um, 75% of our accountants were, um, brand new. Um, this year we've got more of our accountants than not that have been through the cycle once. We did have one of our accountants move up into the accounting manager role, and that's exciting and new for him, and he's learning, but he's also— I think he's got what it takes to make that successful.

59:19

We did have one of our accountants move up into the accounting manager role, and that's exciting and new for him, and he's learning, but he's also— I think he's, he's got what it takes to make that successful. We are losing our controller. Um, before we get to the audit time, which means I'll be spending more time working with the team. Um, but I think, you know, as I said, we've got, uh, Treasury's really stable. They're, they're super important to the audit process.

59:36

We are losing our controller. Um, before we get to the audit time, which means I'll be spending more time working with the team. Um, but I think, you know, as I said, we've got, uh, Treasury's really stable. They're, they're super important to the audit process. Um, purchasing, um, even though they've been.

59:56

Um, purchasing, um, even though they've been stable.

1:00:00

People for years. They've had a few people turn over, but they've got most of the folks who are involved in the audit are consistent. Um, and, and the accountants that we are relying on, most of them have been through the process before, and so it's not their— it's not their first time through this. Um, so that's how I would kind of quantify significant versus not.

1:00:00

People for years. They've had a few people turn over, but they've got most of the folks who are involved in the audit are consistent. Um, and, and the accountants that we are relying on, most of them have been through the process before, and so it's not their— it's not their first time through this. Um, so that's how I would kind of quantify significant versus not.

1:00:23

Mr. Brooks. Oh, sorry, Manager Kester, you had something now. I just want to follow up on what Director Flick said. Director Flick came, you know, to the manager's office with some concerns about next year, finances, the department's capacity next year, not specifically as it relates to audit. And we need to, you know, the manager's office, the administration needs to really be cognizant of that and how we approach the next year and next year's workload because there are so many requests on finances time, because there are things, you know, we could investigate how we do, how we manage some of our funds.

1:00:23

Mr. Brooks. Oh, sorry, Manager Kester, you had something now. I just want to follow up on what Director Flick said. Director Flick came, you know, to the manager's office with some concerns about next year, finances, the department's capacity next year, not specifically as it relates to audit. And we need to, you know, the manager's office, the administration needs to really be cognizant of that and how we approach the next year and next year's workload because there are so many requests on finances time, because there are things, you know, we could investigate how we do, how we manage some of our funds.

1:01:05

We probably should be developing a fund balance policy, right? There are lots of things that good governance things that we should be working on that will not be possible without additional resources. And I think about the next budget cycle being, you know, if we have another budget cycle that's truly having to make far deeper cuts than this year, that will be another thing that impacts just the bandwidth really of Director Flick to fill in the gaps when she has less staff. So I'm just like flagging that extra for you if I do come in the future and say, um, we need this resource to get us through this time because there's, there's all these demands on the finance department that are reasonable given kind of the extenuating circumstances. Thank you.

1:01:05

We probably should be developing a fund balance policy, right? There are lots of things that good governance things that we should be working on that will not be possible without additional resources. And I think about the next budget cycle being, you know, if we have another budget cycle that's truly having to make far deeper cuts than this year, that will be another thing that impacts just the bandwidth really of Director Flick to fill in the gaps when she has less staff. So I'm just like flagging that extra for you if I do come in the future and say, um, we need this resource to get us through this time because there's, there's all these demands on the finance department that are reasonable given kind of the extenuating circumstances. Thank you.

1:01:50

Thanks for that context. Mr. Brooks. Thank you, Madam Chair. And it's a, a quick two-parter. First question for Ms. Tarver, uh, when was this all completed or, you know, prepared for presentation?

1:01:50

Thanks for that context, Mr. Brooks. Thank you, Madam Chair. And it's a, a quick two-parter. First question for Miss, uh, Tarver, uh, when was this all completed or, you know, prepared for presentation? The financial statements themselves?

1:02:07

The financial statements themselves? Yes. Is that—. So the whole reporting package was actually issued on, um, March 31st, which is the due date for your federal and state compliance audits. And so, um, we made sure we met that goal.

1:02:10

Yes. Is that—. So the whole reporting package was actually issued on, um, March 31st, which is the due date for your federal and state compliance audits. And so, um, we made sure we met that goal. Thank you.

1:02:26

Thank you. Because that was the due date. The follow-up will be for city staff, and then it's, it's kind of just a similar question to what Assemblymember Kelly had asked. If this that had findings of misstatements on different amounts, you know, some for millions of dollars, but we started working on budget stuff at the beginning of the year. How did it not change the picture or our view of where the budget was at up until March?

1:02:27

Because that was the due date. The follow-up will be for city staff, and then it's, it's kind of just a similar question to what Assemblymember Kelly had asked. If this that had findings of misstatements on different amounts, you know, some for millions of dollars, but we started working on budget stuff at the beginning of the year. How did it not change the picture or our view of where the budget was at up until March? Thank you.

1:03:01

Thank you. Good question, Mr. Brooks. The significant portion of CBJ's work in audit was completed in November. Um, we could not finalize our work until we had Bartlett's data. And so we, um, as, um, Ms. Tarver mentioned, we were working through the harbor's lease piece, um, which wouldn't affect the things that you were looking at as you work through your budget process.

1:03:01

Good question, Mr. Brooks. The significant portion of CBJ's work and audit was completed in November, um, we could not finalize our work until we had Bartlett's data. And so we, um, as, um, Ms. Tarver mentioned, we were working through the harbor's lease piece, um, which wouldn't affect the things that you were looking at as you work through your budget process. Um, but we really just had to wait until the end of February when we got Bartlett's information to incorporate their data into our financial system, into our financial statements. Tie everything out again, pull together the reports, and then finalize it.

1:03:28

Um, but we really just had to wait until the end of February when we got Bartlett's information to incorporate their data into our financial system, into our financial statements. Tie everything out again, pull together the reports, and then finalize it. But the work on the, the primary pieces that, that you look at when we're doing our budgeting was complete back in November-ish. Thank you. So the, the revenue increase of the $2.7 million for the hotel tax wasn't found out until March.

1:03:46

But the work on the, the primary pieces that, that you look at when we're doing our budgeting was complete back in November-ish. Thank you. So the, the revenue increase of the $2.7 million for the hotel tax wasn't found out until March. Go ahead. That's— no, that's incorrect.

1:04:10

Go ahead. That's— no, that's incorrect. I was just going to respond, actually. That was, um, the $10 million change was, I think, found on the first day of the audit, um, and that, um, the $2.7 for the sales tax was found within the first week of the audit. Thank you, Miss Hall.

1:04:13

I was just going to respond, actually. That was, um, the $10 million change was, I think, found on the first day of the audit, um, and that, um, the $2.7 for the sales tax was found within the first week of the audit. Thank you, Miss Hall. Just to follow up on the discussion about the staff shortage in the accounting field, so this is not unique to CBJ. But Ms. Trevor, is that also, you know, what you're seeing industry-wide?

1:04:30

Just to follow up on the discussion about the staff shortage in the accounting field, so this is not unique to CBJ. But Ms. Trevor, is that also, you know, what you're seeing industry-wide? And are we paying enough? The paying enough, everyone can argue both sides of that. So I think, you know, that I'll leave up to management to figure out.

1:04:43

And are we paying enough? The paying enough, everyone can argue both sides of that. So I think, you know, that I'll leave up to management to figure out. But it is— there's a shortage and there's probably even more of a shortage coming in the future. We obviously look at it from our firm's perspective as well.

1:04:54

But it is— there's a shortage and there's probably even more of a shortage coming in the future. We obviously look at it from our firm's perspective as well. The good news is actually they're seeing more people enroll in accounting. Right now. So, you know, in 4 years, we're also seeing a large— a lot of the larger firms reducing their staffing.

1:05:04

The good news is actually they're seeing more people enroll in accounting. Right now. So, you know, in 4 years, we're also seeing a large— a lot of the larger firms reducing their staffing. And so what we're starting to see is there's movement within people looking for jobs, experienced accountants looking for jobs. Okay.

1:05:16

And so what we're starting to see is there's movement within people looking for jobs, experienced accountants looking for jobs. Okay. Unrelated, and then this would be a question regarding the Bartlett audit team. You know, it was my understanding last year the reason the school district and Bartlett were going to independent auditors was because they could then find people that were— or, you know, they'd be audited by people that specialized, or firms that specialized in healthcare and school districts. And was that the case with the auditing firms we had for JSD and Bartlett?

1:05:27

Unrelated, and then this would be a question regarding the Bartlett audit team. You know, it was my understanding last year the reason the school district and Bartlett were going to independent auditors was because they could then find people that were— or, you know, they'd be audited by people that specialized, or firms that specialized in healthcare and school districts. And was that the case with the auditing firms we had for JSD and Bartlett?

1:06:02

Um, thank you for the question, Miss Hall. So when we selected the, um, when we did the request for proposal for auditing, um, we set that up so that people, that firms could, um, submit for, um, CVJ, for the school district, and for Bartlett. We did have entities that um, put in proposals for all three. We had some that, um, you know, just did towards Bartlett, just did towards the school district. Um, that committee that made the selection for each of the three components included, um, myself, the, um, at the time the CFO for the hospital, the, um, CFO for the school district.

1:06:02

Um, thank you for the question, Miss Hall. So when we selected the, um, when we did the request for proposal for auditing, um, we set that up so that people, that firms could, um, submit for, um, CVJ, for the school district, and for Bartlett. We did have entities that um, put in proposals for all three. We had some that, um, you know, just did towards Bartlett, just did towards the school district. Um, that committee that made the selection for each of the three components included, um, myself, the, um, at the time the CFO for the hospital, the, um, CFO for the school district.

1:06:50

Um, Chair Wall was part of that. Um, and so as we worked through, um, those decision points, um, those respective, um, education and healthcare, um, parties were present in the room. And so, um, you know, I, I think the need was met, um, and the process provided for that. And just make a very quick comment, which is just, I know, you know, we went into contracts for multiple years and we're for that, but that was a vote of the Assembly to do 3 different ones. It was a close vote.

1:06:50

Um, Chair Wall was part of that. Um, and so as we worked through, um, those decision points, um, those respective, um, education and healthcare, um, parties were present in the room. And so, um, you know, I, I think the need was met, um, and the process provided for that. And just make a very quick comment, which is just, I know, you know, we went into contracts for multiple years and we're for that, but that was a, that was a vote of the Assembly to do 3 different ones. It was a close vote.

1:07:29

I don't remember who was here at the time, but it was 5-4 or something. And so just to say, like, when the time comes again to consider it, I think it's worth kind of evaluating how that went to have 3 versus 1. So, okay, I think I'm gonna wrap us up here. Really want to thank Ms. Tarver and LG team for being here. Also want to thank— we've got some hospital and JSD folks in the audience.

1:07:29

I don't remember who was here at the time, but it was 5-4 or something. And so just to say, like, when the time comes again to consider it, I think it's worth kind of evaluating how that went to have 3 versus 1. So, okay, I think I'm gonna wrap us up here. Really want to thank Ms. Tarver and LG team for being here. Also want to thank— we've got some hospital and JSD folks in the audience.

1:07:58

So thank you guys for all your work working through your own audits, and we will move forward.

1:07:58

So thank you guys for all your work working through your own audits, and we will move forward.

1:08:10

All right, that is okay. We're gonna give folks a 5-minute break here.

1:08:10

All right, that is okay. We're gonna give folks a 5-minute break here.

1:15:17

I will bring us to PAC, um, to order. Um, brings us to sales tax code ordinances.

1:15:17

I will bring us to PAC and to order, um, brings us to sales tax code ordinances.

1:15:27

Ms. Flick, do you want to talk about all of these together or go through them individually, or, um, yeah, thank you, Chair Wall. Um, Tonight we have 5 different sales tax ordinances on the agenda, and we've broken them into 2 groups. And so this first group is what we've just called regular business. So these are things that were going on, um, outside of the budget process. Um, and so I think we can take these 3 together because, um, in some ways they're mostly housekeeping, although one is a little bit of a policy.

1:15:27

Ms. Flick, do you want to talk about all of these together or go through them individually, or, um, yeah, thank you, Chair Wall. Um, Tonight we have 5 different sales tax ordinances on the agenda, and we've broken them into 2 groups. And so this first group is what we've just called regular business. So these are things that were going on, um, outside of the budget process. Um, and so I think we can take these 3 together because, um, in some ways they're mostly housekeeping, although one is a little bit of a policy.

1:16:05

Call, I am going to fully acknowledge that we have Attorney Wright in the room as a phone-a-friend, and our Treasurer, um, Ms. Kostic, in the room as a phone-a-friend in case I get myself into something I can't quite answer. Um, we do have folks here to help out tonight. Um, so ordinances 2026 number 20, 21, and 22 are all, um, items that have been going on in the background related to sales tax ordinances. The first one, number 20, is really housekeeping from the perspective of, you know, where we have continual questions and lack of clarity on things. We try to add useful definitions to the sales tax code to help out our merchants, to help out our staff as they're implementing.

1:16:05

Call, I am going to fully acknowledge that we have Attorney Wright in the room as a phone-a-friend, and our Treasurer, um, Ms. Kostic, in the room as a phone-a-friend in case I get myself into something I can't quite answer. Um, we do have folks here to help out tonight. Um, so ordinances 2026 number 20, 21, and 22 are all, um, items that have been going on in the background related to sales tax ordinances. The first one, number 20, is really housekeeping from the perspective of, you know, where we have continual questions and lack of clarity on things. We try to add useful definitions to the sales tax code to help out our merchants, to help out our staff as they're implementing.

1:16:56

And so this ordinance includes some definitions. Definitions. One of the other things that's changing through this ordinance is— has to do with what we— how we determine if something's timely or not. And so for a long time, postmarks were reliable. You could trust that when you took something to the post office, it would get postmarked with a date that you might be able to read.

1:16:56

And so this ordinance includes some definitions. Definitions. One of the other things that's changing through this ordinance is— has to do with what we— how we determine if something's timely or not. And so for a long time, postmarks were reliable. You could trust that when you took something to the post office, it would get postmarked with a date that you might be able to read.

1:17:26

And you could, you know, see that that's happening. That is not always the case. And we have found as more and more people and businesses are using like a bill pay option out of their account, what actually happens is you go into your account and say, hey, I want to, I want to send a payment to so-and-so. Well, that bank sends that off to a third party who will eventually get around to cutting a whole bunch of checks. And mailing them out, and they typically don't postmark anything.

1:17:26

And you could, you know, see that that's happening. That is not always the case. And we have found as more and more people and businesses are using like a bill pay option out of their account, what actually happens is you go into your account and say, hey, I want to, I want to send a payment to so-and-so. Well, that bank sends that off to a third party who will eventually get around to cutting a whole bunch of checks. And mailing them out, and they typically don't postmark anything.

1:17:58

And so we might get something weeks after somebody went into their bank account and said, hey, make this payment. And so, um, one of the things that this ordinance does is it, um, redefines what, um, receipt of a report or receipt of a payment is, and that will be when CBJ receives it. And so that's a little bit different moving away from, from postmark. The other thing that the code does that's a little bit different is currently the treasurer has authority to waive penalties and interest with relation to property taxes, but not necessarily sales tax. And there's a lot of good reasons why Having the treasurer have that authority to manage small amounts where there's a reasonable reason for a waiver to occur makes sense in the sales tax realm.

1:17:58

And so we might get something weeks after somebody went into their bank account and said, hey, make this payment. And so, um, one of the things that this ordinance does is it, um, redefines what, um, receipt of a report or receipt of a payment is, and that will be when CBJ receives it. And so that's a little bit different moving away from, from postmark. The other thing that the code does that's a little bit different is currently the treasurer has authority to waive penalties and interest with relation to property taxes, but not necessarily sales tax. And there's a lot of good reasons why Having the treasurer have that authority to manage small amounts where there's a reasonable reason for a waiver to occur makes sense in the sales tax realm.

1:18:59

And so this authorizes the treasurer to do those same kind of adjustments that are allowed through our property tax code. So, so that's, that's the first ordinance, and I guess I can take questions on that. Yeah, maybe let's pause. Any questions on the 2026-20? Mayor Weldon.

1:18:59

And so this authorizes the treasurer to do those same kind of adjustments that are allowed through our property tax code. So, so that's, that's the first ordinance, and I guess I can take questions on that. Yeah, maybe let's pause. Any questions on the 2026-20? Mayor Weldon.

1:19:20

Thank you, and I appreciate your explanation of the— of why we're changing how we say we received it. So sales tax online is pretty simple because you do your sales tax online, immediately get an email from the city that says we've got it. But how would we do— how would you— I guess my question would be, how does the city receive mail and how is that stamped, postmarked, whatever, when we get it? And is it reliant on one person? What if that person is sick?

1:19:20

Thank you, and I appreciate your explanation of the— of why we're changing how we say we received it. So sales tax online is pretty simple because you do your sales tax online, immediately get an email from the city that says we've got it. But how would we do— how would you— I guess my question would be, how does the city receive mail and how is that stamped, postmarked, whatever, when we get it? And is it reliant on one person? What if that person is sick?

1:19:55

Thank you, Mayor Weldon. That's a great question. Um, we, um, get.

1:19:55

Thank you, Mayor Weldon. That's a great question. Um, we, um, get.

1:20:00

Well, through the U.S. Postal Service, we have a courier that delivers it daily. We have one person who primarily handles the mail, but we have a team of people who are trained and capable and able. And part of our regular process is we've got one of those good old-fashioned stamps, self-inking stamps, and we hit every envelope that is coming in with a payment or a report on the day that we get it. Likewise, if somebody uses one of our drop boxes, the day that we collect those, we mark it as the day that we receive those.

1:20:00

Well, through the U.S. Postal Service, we have a courier that delivers it daily. We have one person who primarily handles the mail, but we have a team of people who are trained and capable and able. And part of our regular process is we've got one of those good old-fashioned stamps, self-inking stamps, and we hit every envelope that is coming in with a payment or a report on the day that we get it. Likewise, if somebody uses one of our drop boxes, the day that we collect those, we mark it as the day that we receive those.

1:20:36

And so it's, it's not reliant on one person. It does, it does still rely on the Postal Service to get the mail to its destination, but once it is in CBJ's possession, we meticulously marked it as received and Um, we retain, um, those receipt envelopes for an appropriate period of time, um, in case there are questions. Thank you for the clarification, appreciate that. And Ms. Wall, um, did you want to move these one at a time, or do you want to continue on with explanation? Sorry, I missed that.

1:20:36

And so it's, it's not reliant on one person. It does, it does still rely on the Postal Service to get the mail to its destination, but once it is in CBJ's possession, we meticulously marked it as received and Um, we retain, um, those receipt envelopes for an appropriate period of time, um, in case there are questions. Thank you for the clarification, appreciate that. And Ms. Wall, um, did you want to move these one at a time, or do you want to continue on with explanation? Sorry, I missed that.

1:21:14

Um, I'd say we move them one at a time after we're done discussing them. Um, let's see if we have other questions on this one. Before we take action. I will ask a question. Um, is there an— did you consider an alternative to, um, choosing the receipt date as the date?

1:21:14

Um, I'd say we move them one at a time after we're done discussing them. Um, let's see if we have other questions on this one. Before we take action. I will ask a question. Um, is there an— did you consider an alternative to, um, choosing the receipt date as the date?

1:21:39

I, I don't know what that would be, so I don't have like an idea, but it is— I understand why you can't use the postmark anymore because it's not reliable, but Um, you know, I imagine there will be implementation challenges, you know, to essentially pushing the date later, that you'll have more people who will be late, um, who think they're on time. Is there another option, and did you think about it? Yeah, so thank you for the question. You know, um, as Mayor Weldon said, if people file online, You know, it is date and time stamped when that filing occurs. So super reliable, super easy.

1:21:39

I, I don't know what that would be, so I don't have like an idea, but it is— I understand why you can't use the postmark anymore because it's not reliable, but Um, you know, I imagine there will be implementation challenges, you know, to essentially pushing the date later, that you'll have more people who will be late, um, who think they're on time. Is there another option, and did you think about it? Yeah, so thank you for the question. You know, um, as Mayor Weldon said, if people file online, You know, it is date and time stamped when that filing occurs. So super reliable, super easy.

1:22:25

The merchant who's doing the filing will know because they've got it in front of their screen. They can screenshot it. We use postmark today and it is very problematic because if there is no postmark, then we have to use when we've received it because there's no other way we, we don't know when it was put in the mail. We only know if it's postmarked or when we get it. And so because, because there's been so many issues and because there is lack of consistency with the ability to get a postmark, we feel like just moving to a receipt date is cleaner.

1:22:25

The merchant who's doing the filing will know because they've got it in front of their screen. They can screenshot it. We use postmark today and it is very problematic because if there is no postmark, then we have to use when we've received it because there's no other way we, we don't know when it was put in the mail. We only know if it's postmarked or when we get it. And so because, because there's been so many issues and because there is lack of consistency with the ability to get a postmark, we feel like just moving to a receipt date is cleaner.

1:23:07

We can absolutely communicate that there will be implementation challenges. Um, but we are also kind of experiencing that already with, with the postmark. Um, and so I, I think we can, we can manage through that. And as with any change, there's change management that goes with it. I have Mr. Brooks, then Mayor Weldon.

1:23:07

We can absolutely communicate that there will be implementation challenges. Um, but we are also kind of experiencing that already with, with the postmark. Um, and so I, I think we can, we can manage through that. And as with any change, there's change management that goes with it. I have Mr. Brooks, then Mayor Weldon.

1:23:31

Mayor Weldon, you sort of kind of answered it, but, uh, how are you going to tell, um, the businesses that we have changed the policy, I guess, or Or the first month, if they thought they got it postmarked, you can have a little note that says FYI, from now on it'll be date received and we received it 2 days after the deadline. Thank you for the question. Anytime that there's a sales tax change, we do have communication that goes out to all of our merchants for which we have— we do email for those who have opted in to receive email. Um, you know, for a large change like this, I would imagine we would, um, do email and probably follow up with a postcard just, um, letting folks know about the change. Um, this particular ordinance takes effect 30 days after adoption.

1:23:31

Mayor Weldon, you sort of kind of answered it, but, uh, how are you going to tell, um, the businesses that we have changed the policy, I guess, or Or the first month, if they thought they got it postmarked, you can have a little note that says FYI, from now on it'll be date received and we received it 2 days after the deadline. Thank you for the question. Anytime that there's a sales tax change, we do, we do have communication that goes out to all of our merchants for which we have, we do email for those who have opted in to receive email. Um, you know, for a large change like this, I would imagine we would, um, do email and probably follow up with a postcard just, um, letting folks know about the change. Um, this particular ordinance takes effect 30 days after adoption.

1:24:25

Um, so right now it's scheduled for, um, public hearing and action on June 8th. Um, our next, uh, Quarterly filing won't be till the end of July, and so we'll have about a month after— we're going to end a quarter now, but then you have a month to file, so the end of July. So we'll have time to do some email blasts, to work with our Communications and Engagement team to do social media PSAs, all of those, as well as postcarding out to folks.

1:24:25

Um, so right now it's scheduled for, um, public hearing and action on June 8th. Um, our next, uh, Quarterly filing won't be till the end of July, and so we'll have about a month after— we're going to end a quarter now, but then you have a month to file, so the end of July. So we'll have time to do some email blasts, to work with our Communications and Engagement team to do social media PSAs, all of those, as well as postcarding out to folks.

1:25:03

Mr. Brooks, then Mr. Kelly. Thank you, Madam Chair. And, you know, this might just be a little pedantic, but on, uh, page 4 of that, on, uh, line C, the extraordinary circumstances, um, is talking about the things that do not constitute an extraordinary circumstance, including financial hardship, return payments, or failure to pick up or read mail, or to make arrangements for an appropriate and responsible person to pick up or read mail. And it just seems like if— what if someone did opt for only the email communications? Or it just seems heavily specific on the physical aspect of mail and not all methods that could be used for communications or letting someone know?

1:25:03

Mr. Brooks, then Mr. Kelly. Thank you, Madam Chair. And, you know, this might just be a little pedantic, but on, uh, page 4 of that, on, uh, line C, the extraordinary circumstances, um, is talking about the things that do not constitute an extraordinary circumstance, including financial hardship, return payments, or failure to pick up or read mail, or to make arrangements for an appropriate and responsible person to pick up or read mail. And it just seems like if— what if someone did opt for only the email communications? Or it just seems heavily specific on the physical aspect of mail and not all methods that could be used for communications or letting someone know?

1:25:58

Um, thank you for the question, Mr. Brooks. I, um, believe part of the reason why that is called out is that is specifically one of the things we hear all the time. Oh, I didn't, I didn't actually pick up my mail. I didn't— oh yeah, something came to me, I didn't bother to read it. It's like, well, we've, we've let you know, and just because you didn't read it doesn't mean that you're now exempt from whatever the change is.

1:25:58

Um, thank you for the question, Mr. Brooks. I, um, believe part of the reason why that is called out is that is specifically one of the things we hear all the time. Oh, I didn't, I didn't actually pick up my mail. I didn't— oh yeah, something came to me, I didn't bother to read it. It's like, well, we've, we've let you know, and just because you didn't read it doesn't mean that you're now exempt from whatever the change is.

1:26:22

And so, yes, it does seem a little specific, but it is specific for a reason. Thank you. Mr. Kelly. Thank you. I just want to make sure that my understanding of this is complete because I do see that, you know, it sounds like we're completely getting rid of the postmark as a standard, but I'm just wondering What happens if somebody goes through the extra trouble of taking something?

1:26:22

And so, yes, it does seem a little specific, but it is specific for a reason. Thank you. Mr. Kelly. Thank you. I just want to make sure that my understanding of this is complete because I do see that, you know, it sounds like we're completely getting rid of the postmark as a standard, but I'm just wondering What happens if somebody goes through the extra trouble of taking something?

1:26:54

Obviously, this wouldn't apply to the bill pay situation, but if somebody goes to the trouble of going to the post office, getting it hand-canceled by the person at the desk, that wouldn't be a valid— that wouldn't be a valid documentation that it was submitted on time. Um, thank you for the question, Mr. Kelly. If this ordinance passes, it would not. So, um, if your sales tax report and remittance was due on July 31st and you walked it to the post office on July 31st and got it stamped, there is no way that it's going to be in CB's hand on that same day. So it would be considered late because we would look at the day that we receive it.

1:26:54

Obviously, this wouldn't apply to the bill pay situation, but if somebody goes to the trouble of going to the post office, getting it hand canceled by the person at the desk, that wouldn't be a valid— that wouldn't be a valid documentation that it was submitted on time. Um, thank you for the question, Mr. Kelly. If this ordinance passes, it would not. So, um, if your sales tax report and remittance was due on July 31st and you walked it to the post office on July 31st and got it stamped, there is no way that it's going to be in CB's hand on that same day. So it would be considered late because we would look at the day that we receive it.

1:27:34

And so that's why our communication is going to be really important. Thank you. Mayor Weldon, you ready for a motion? Yes, Madam Chair, I move Ordinance Number 2026-20 to the full assembly for public hearing on June 8th. Any objections?

1:27:34

And so that's why our communication is going to be really important. Thank you. Mayor Weldon, you ready for a motion? Yes, Madam Chair, I move Ordinance Number 2026-20 to the full assembly for public hearing on June 8th. Any objections?

1:27:55

Seeing none, that is so moved. Um, you want to talk about 2026-21? Yes, this is very much housekeeping. Um, the Alaska Remote Sellers Sales Tax Commission, or ARSSSTC as it's known, um, They have updated their code and their— we have a section of our code that takes what the ARSS TC has and puts it in ours because we utilize their services. So this really, really truly is housekeeping.

1:27:55

Seeing none, that is so moved. Um, you want to talk about 2026-21? Yes, this is very much housekeeping. Um, the Alaska Remote Sellers Sales Tax Commission, or ARSSTC as it's known, um, have updated their code, and they're— we have a section of our code that takes what the ARSS TC has and puts it in ours because we utilize their services. So this really, really truly is housekeeping.

1:28:31

They made minor changes just like we make minor changes from time to time, and so this is just adding those changes to our code as it relates to the ARSSTC. Questions from the body? Seeing none, Mayor Weldon. I move Ordinance Number 2026-21 to the full assembly for public hearing on June 8th. Any objections?

1:28:31

They made minor changes just like we make minor changes from time to time. And so this is just adding those changes to our code as it relates to the ARSSTC. Questions from the body? Seeing none, Mayor Weldon. I move Ordinance Number 2026-21 to the full assembly for public hearing on June 8th.

1:29:01

Any objections? Seeing none, that's so moved. Miss Flick, 2026-22. Thank you. One of the changes that the ARSSTC made was adopting the ability to collect sales tax for marketplace facilitators, an area that they had not previously been engaged in.

1:29:03

Seeing none, that's so moved. Miss Flick, 2026-22. Thank you. One of the changes that the ARSSTC made was adopting the ability to collect sales tax for marketplace facilitators, an area that they had not previously been engaged in. And through that implementation of that program within that commission, municipalities can opt in to letting the ARSSTC collect from marketplace facilitators on our behalf.

1:29:26

And through that implementation of that program within that commission, municipalities can opt in to letting the ARSSTC collect from marketplace facilitators on our behalf. 2026-22 Is essentially us raising our hand and saying, yes please, we want the ARSSTC to collect from our marketplace facilitators. This does not take away our ability to set tax. It does not take away our ability.

1:29:43

2026-22 Is essentially us raising our hand and saying, yes please, we want the ARSSTC to collect from our marketplace facilitators. This does not take away our ability to set tax. It does not take away our ability.

1:30:00

To set exemptions. It simply allows our code as it relates to any of these merchants, that sales tax to be collected by the, by the commission and remitted to us on our behalf. It also allows the commission to work on enforcement litigation, and they're doing that on behalf of the state. So they've got a little bit of a bigger posture with these marketplace facilitators than we would just as a single municipality. So staff thinks that it's appropriate and good and ultimately would be good for CBJ to opt in and let the ARSSTC take on that component for us.

1:30:00

To set exemptions. It simply allows our code as it relates to any of these merchants, that sales tax to be collected by the, by the commission and remitted to us on our behalf. It also allows the commission to work on enforcement litigation, and they're doing that on behalf of the state. So they've got a little bit of a bigger posture with these marketplace facilitators than we would just as a single municipality. So staff thinks that it's appropriate and good and ultimately would, would be good for CBJ to opt in and let the ARSSTC take on that component for us.

1:30:46

Mayor Weldon. Thank you for that. Are they going to charge more for that service? Good question. I don't believe that they actually charge more, but they collect a percentage of what we have.

1:30:46

Mayor Weldon. Thank you for that. Are they going to charge more for that service? Good question. I don't believe that they actually charge more, but they collect a percentage of what we have.

1:30:56

So So yes, we will pay more, but I— but what we're getting for it, um, we think is worthwhile. Mr. Brooks. Thank you, Madam Chair. Do—. Are they pretty timely about getting the payments out to the recipients?

1:30:56

So So yes, we will pay more, but I— but what we're getting for it, um, we think is worthwhile. Mr. Brooks. Thank you, Madam Chair. Do—. Are they pretty timely about getting the payments out to the recipients?

1:31:14

Thank you for the question, Mr. Brooks. They are very reliable and very timely. And I assume that we can, you know, when we When we see our quarterly sales tax numbers, usually we see what's coming from the remote seller sales tax. I'm assuming we can still break out what's coming from our third-party marketplace facilitators just because we have been tracking that data from a policy perspective. So, um, thank you for that.

1:31:14

Thank you for the question, Mr. Brooks. They are very reliable and very timely. And I assume that we can, you know, when we When we see our quarterly sales tax numbers, usually we see what's coming from the remote seller sales tax. I'm assuming we can still break out what's coming from our third-party marketplace facilitators just because we have been tracking that data from a policy perspective. So thank you for that.

1:31:50

Thank you for the question. Certainly, when we look at like, what do we collect in-house, that will go down. What comes in through remote sellers will go up. We have not been breaking out in our reporting for you the marketplace facilitator piece, but we would have the ability to, to see details behind it. Mayor Weldon.

1:31:50

Thank you for the question. Certainly, when we look at like, what do we collect in-house, that will go down. What comes in through remote sellers will go up. We have not been breaking out in our reporting for you the marketplace facilitator piece, but we would have the ability to, to see details behind it. Mayor Weldon.

1:32:15

Thank you, Madam Chair. I move Ordinance 2026-22 to full assembly for public hearing on June 8th.

1:32:15

Thank you, Madam Chair. I move Ordinance 2026-22 to full assembly for public hearing on June 8th.

1:32:23

Any objections?

1:32:23

Any objections?

1:32:26

Seeing none, that is so moved. That brings us to Agenda Topic 5, um, and so these are our foregone revenue ordinances. Um, the, you know, so these are the ones that were, um, drafted after direction from the Finance Committee Um, after the, um, work of the Foregone Revenue Group, I believe the first one is up for public hearing and action currently on June 8th. I pulled it off the consent agenda to make sure we talk about in committee tonight because I had heard there were some questions about it. Um, I don't know if anyone has amendments, but, um, this will be your last time to I mean, not your last time, but another opportunity to dig into this one before we deal with it on Monday.

1:32:26

Seeing none, that is so moved. That brings us to Agenda Topic 5, um, and so these are our foregone revenue ordinances. Um, the, you know, so these are the ones that were, um, drafted after direction from the Finance Committee. Um, after the, um, work of the Foregone Revenue Group, I believe the first one is up for public hearing and action currently on June 8th. I pulled it off the consent agenda to make sure we talk about in committee tonight because I had heard there were some questions about it.

1:33:11

Um, I don't know if anyone has amendments, but, um, this will be your last time to I mean, not your last time, but another opportunity to dig into this one before we deal with it on Monday.

1:33:25

Miss Flick, do you want to speak to this? Is there anything you want to say about this one? I know we've talked about it, but thank you, Chair Wall. I don't know that I have anything in particular to add on this. I know that there have been folks reaching out to individual Assembly members.

1:33:25

Miss Flick, do you want to speak to this? Is there anything you want to say about this one? I know we've talked about it, but— Thank you, Chair Wall. I don't know that I have anything in particular to add on this. I know that there have been folks reaching out to individual Assembly members.

1:33:48

And one of, one of the concepts being floated is that if this exemption goes away, that there would be some sort of double taxation, and there is not. There's two very specific services happening when someone sells a whale watching tour for a whale watching tour operator. There is the cost of the tour, and there is the cost of the operator employing the agent or the broker to sell on their behalf. And so right now, that, that piece of having somebody else sell on behalf of the operator is exempt. If that— if Ordinance 2026-25 is approved as presented in your packet, that sales component would then be taxable, would be part of sales tax.

1:33:48

And one of, one of the concepts being floated is that if this exemption goes away, that there would be some sort of double taxation, and there is not. There's two very specific services happening when someone sells a whale watching tour for a whale watching tour operator. There is the cost of the tour, and there is the cost of the operator employing the agent or the broker to sell on their behalf. And so right now, that, that piece of having somebody else sell on behalf of the operator is exempt. If that— if Ordinance 2026-25 is approved as presented in your packet, that sales component would then be taxable, would be part of sales tax.

1:34:38

And so there is— there's not really a double taxation. It is different than it happens today, but it is very, very much two distinct services taking place.

1:34:38

And so there is— there's not really a double taxation. It is different than it happens today, but it is very, very much two distinct services taking place.

1:34:51

Questions on this? Mr. Kelly. Thank you. I did correspond a little bit with you and Miss Pierce on this as well. It was, it was actually also kind of my understanding.

1:34:51

Questions on this? Mr. Kelly. Thank you. I did correspond a little bit with you and Miss Pierce on this as well. It was, it was actually also kind of my understanding.

1:35:07

One of the people who has been going around all the ESM members came to my office hours and he provided me with the infographic and was saying this is double taxation. And I looked at like all this, the way the infographic kind of explained it to me, I realized kind of your same explanation. It wasn't actually double taxation, but it does result in basically extra money being paid by somebody either that's an independent operator or that's the end customer, which would probably make that operation less competitive. So I guess— oops, I kind of answered my own question in the process of my explanation here, but basically I guess, I guess my question is like, it's still, even if this isn't double taxation, this is still resulting in either somebody paying, paying more, or somebody eating, eating a cost. Is that correct?

1:35:07

One of the people who has been going around all the ESM members came to my office hours and he provided me with the infographic and was saying this is double taxation. And I looked at like all this, the way the infographic kind of explained it to me, I realized kind of your same explanation. It wasn't actually double taxation, but it does result in basically extra money being paid by somebody either that's an independent operator or that's the end customer, which would probably make that operation less competitive. So I guess— oops, I kind of answered my own question in the process of my explanation here, but basically I guess, I guess my question is like, it's still, even if this isn't double taxation, this is still resulting in either somebody paying, paying more, or somebody eating, eating a cost. Is that correct?

1:36:14

Thank you for the question, Mr. Kelly.

1:36:14

Thank you for the question, Mr. Kelly.

1:36:19

I think the answer to your question is yes. Right now, the tour operator is able to purchase services of a broker or an agent without having to pay the sales tax on it. So if this ordinance goes through and that exemption is repealed, then the operator would be paying sales tax on the services of the broker who's representing them. And from that perspective, the operator would be paying more to operate their business if they don't make other changes.

1:36:19

I think the answer to your question is yes. Right now, the tour operator is able to purchase services of a broker or an agent without having to pay the sales tax on it. So if this ordinance goes through and that exemption is repealed, then the operator would be paying sales tax on the services of the broker who's representing them. And from that perspective, the operator would be paying more to operate their business if they don't make other changes.

1:37:09

And would, from your knowledge, either, yeah, I guess, from you, would you have the knowledge to know, like, would this fall primarily more on, on the independent operators? Or on— or are there different business models that don't necessarily— that be able to sidestep this tax? Um, thank you for the question, Mr. Kelly. I don't actually have enough knowledge of everybody in this industry sector to know how they're set up and what their business models are.

1:37:09

And would, from your knowledge, either, yeah, I guess, from you, would you have the knowledge to know, like, would this fall primarily more on, on the independent operators? Or on— or are there different business models that don't necessarily— that be able to sidestep this tax? Um, thank you for the question, Mr. Kelly. I don't actually have enough knowledge of everybody in this industry sector to know how they're set up and what their business models are.

1:37:40

Mayor Weldon, then Mr. Smith, then Mr. Brooks. Go ahead, Mayor Weldon. Okay, just we'll put some numbers to this because I think I finally got it. Thanks, Ms. Kostic, to working with me today. Okay, so let's just say the sale price totally is $100, so we get $5.

1:37:40

Mayor Weldon, then Mr. Smith, then Mr. Brooks. Go ahead, Mayor Weldon. Okay, just we'll put some numbers to this because I think I finally got it. Thanks, Ms. Kostic, to working with me today. Okay, so let's just say the sale price totally is $100, so we get $5.

1:38:00

So the agent takes $20, so they have to pay a dollar, which leaves the $80 that the operator would have to pay $4. So the agent would either choose to pass that $1 on to the operator, so the operator only gets $79, or the agent would choose to take it out of their cut and only pay themselves $19.

1:38:00

So the agent takes $20, so they have to pay a dollar, which leaves the $80 that the operator would have to pay $4. So the agent would either choose to pass that $1 on to the operator, so the operator only gets $79, or the agent would choose to take it out of their cut and only pay themselves $19.

1:38:29

Is that pretty much it? I, I think that's fair enough. Okay, Mr. Smith.

1:38:29

Is that pretty much it? I, I think that's fair enough. Okay, Mr. Smith.

1:38:42

Thank you, Madam Chair. Can you hear me?

1:38:42

Thank you, Madam Chair. Can you hear me?

1:38:46

Barely we can, but speaking up would be just a little helpful.

1:38:46

Barely, we can, but speaking up would be just a little helpful.

1:38:54

Okay, hopefully this is better. Sounds great. I guess— great, thank you. I guess I— There's not the memo, but we, but we all received something from, from Director Flick on this. I guess the thing that I'm just confused at is, as it's, if this were to change on a $100 sale, there would be $6 of sales tax recollected.

1:38:54

Okay, hopefully this is better. Sounds great. I guess— great, thank you. I guess I There's not the memo, but we, but we all received something from, from Director Flick on this. I guess the thing that I'm just confused at is, as it's, if this were to change on a $100 sale, there would be $6 of sales tax recollected.

1:39:25

Well, collected some way, but maybe actually Anyway, remitted to the city, is that right?

1:39:25

Well, collected some way, but maybe actually Anyway, remitted to the city, is that right?

1:39:35

With, with the example that I see in this email, the math to me looks like it's a $100 sale, yet $6 is remitted to the city. And that, I'm confused on why that's here. Thank you for the question, Mr. Smith. I am taking advantage of my phone-a-friend to our Treasurer, Ms. Kostic, who can help explain this.

1:39:35

With, with the example that I see in this email, the math to me looks like it's a $100 sale, yet $6 is remitted to the city. And that, I'm confused on why that's here. Thank you for the question, Mr. Smith. I am taking advantage of my phone-a-friend to our Treasurer, Ms. Kostic, who can help explain this.

1:40:01

All right, thank you for the record. Ruth Kostek, Treasurer for CBJ. Um, Mr. Smith, uh, that is correct. Um, so there would be a total of $5 collected and remitted on the sale, the $100 sale of the tour to the tourist, and an additional $1 on the $20 sale of the agent's services to the tour operator, for a total of $6. As opposed to today where we would collect $5.

1:40:01

All right, thank you for the record. Ruth Kostek, Treasurer for CBJ. Um, Mr. Smith, uh, that is correct. Um, so there would be a total of $5 collected and remitted on the sale, the $100 sale of the tour to the tourist, and an additional $1 on the $20 sale of the agent's services to the tour operator, for a total of $6. As opposed to today where we would collect $5.

1:40:33

Okay. And I'll— again, sorry to be referencing something that's not in the record, but also in this email it says this is similar to, or, you know, repealing exemption would adjust the taxation As is similar between other non-tourism businesses who use external contractors, I guess, are there other situations in different business dealings within the city and borough of Juneau where the sale is $100 yet $6 of sales taxes is remitted to the city?

1:40:33

Okay. And I'll— again, sorry to be referencing something that's not in the record, but also in this email it says this is similar to— or, you know, repealing exemption would adjust the taxation as is similar between other non-tourism businesses who use external contractors. I guess, are there other situations in different business dealings within the city and borough of Juneau where the sale is $100, yet $6 of sales taxes is remitted to the city?

1:41:19

Okay, I'm just using rough numbers, but again, just that where it's like, it almost seems like more sales tax than our standard 5% rate is being remitted. So thank you, Mr. Smith. I think the— where this, this specific issue gets confusing is because for the tour agent, they're— the price that they charge is a percent of the, of the sale that they're making. And so it seems very interrelated in that way. But if you think of any other business who, you know, they're hiring a contract, maybe they hire an accountant to do some work for them, they're going to pay sales tax on that and they're going to pass that cost on through what they charge to their end customer for the things that they sell out to the— out into the world.

1:41:19

Okay, I'm just using rough numbers, but again, just that where it's like, it almost seems like more sales tax than our standard 5% rate is being remitted. So thank you, Mr. Smith. I think the, where this, this specific issue gets confusing is because for the tour agent, they're, the price that they charge is a percent of the, of the sale that they're making. And so it seems very interrelated in that way. But if you think of any other business who, you know, they're hiring a contractor, maybe they hire an accountant to do some work for them, they're going to pay sales tax on that and they're going to pass that cost on through what they charge to their end customer for the things that they sell out to the— out into the world.

1:42:13

And so if you think about it that way, It's really no different. It just, it seems so interconnected because the, that cost, that price that the agent is charging is a percent of the total tour cost that the tour operator is charging to the end customer. And I think in most cases it gets deducted from the net proceeds that get passed on to the tour operator as a way of payment. So we don't think of it as a traditional business arrangement, but it really is just the tour operator hiring a contractor to sell tours for them. Can I follow up again, Madam Chair?

1:42:13

And so if you think about it that way, It's really no different. It just, it seems so interconnected because the, that cost, that price that the agent is charging is a percent of the total tour cost that the tour operator is charging to the end customer. And I think in most cases it gets deducted from the net proceeds that get passed on to the tour operator as a way of payment. So we don't think of it as a traditional business arrangement, but it really is just the tour operator hiring a contractor to sell tours for them. Can I follow up again, Madam Chair?

1:43:00

Yes. I guess, would it be illegal for the person selling— it's illegal for the person selling that tour to charge $6 $6 in sales tax on a $100 sale, even though throughout the courses of the business transaction they're remitting $6 of sales tax. So, Mr. Smith, the— if the sale to the customer is $100, the 5% sales tax would be applied to the $100. When an operator hires a contractor, a broker, an agent, the fee that the broker charges would have sales tax applied to it. And so the, if the tour operator, operator wanted to recover more cost of their business, they would charge a higher fee for their tour.

1:43:00

Yes. I guess, would it be illegal for the person selling— it's illegal for the person selling that tour to charge $6 $6 in sales tax on a $100 sale, even though throughout the courses of the business transaction they're remitting $6 of sales tax. So, Mr. Smith, the— if the sale to the customer is $100, the 5% sales tax would be applied to the $100. When an operator hires a contractor, a broker, an agent, the fee that the broker charges would have sales tax applied to it. And so the, if the tour operator, operator wanted to recover more cost of their business, they would charge a higher fee for their tour.

1:44:03

Not that they would charge more in sales tax, but they would raise the cost of their tour to account for the fact that it is costing them more to sell their tours through this mechanism.

1:44:03

Not that they would charge more in sales tax, but they would raise the cost of their tour to account for the fact that it is costing them more to sell their tours through this mechanism.

1:44:20

Can I follow up on that? I'm just trying to get to the— I'm just trying to get a picture. Yeah, I am. Well, let me— are people still confused besides Mr. Smith? I think a little bit.

1:44:20

Can I follow up on that? I'm just trying to get to the— I'm just trying to get a picture. Yeah, I am. Well, let me— are people still confused besides Mr. Smith? I think a little bit.

1:44:34

So, Mr. Smith, or some people are. Mr. Smith, go ahead.

1:44:34

So, Mr. Smith, or some people are. Mr. Smith, go ahead.

1:44:40

And sorry if I'm the only one, but I still am. So, if they need to, if they're going to, like, if they're saying, hey, we need— we're going to have to submit $6 in sales tax on this $100 sale., but then they, then they raise the ticket, they raise the price a dollar to pay for that extra dollar. They can only then collect $5.05.

1:44:40

And sorry if I'm the only one, but I still am. So, if they need to, if they're going to, like, if they're saying, hey, we need— we're going to have to submit $6 in sales tax on this $100 sale. But then they, then they raise the ticket and they raise the price a dollar to pay for that extra dollar. They can only then collect $5.05.

1:45:07

So there, anyway, I'm just like, I, it just, I just, I'm confused. And maybe I don't, again, that's why I was kind of asking of other examples, like for people that sell cars, if there's a commission, maybe, maybe that I'm just getting too narrowly focused on a certain segment of businesses, but I'm just— it just seems from a principle, it seems straight. I just don't actually understand how they raise the price to collect the sales tax that they need to, you know, to capture that additional sales tax that they're charging. I'm— anyway, I'm still confused at how they actually don't— how they're able to legally collect and, you know, make raise the price, collect the correct amount of sales tax, and remit it without it, you know, where they're essentially paying more in sales tax than they can actually legally collect. Mr. Smith, I would suggest that you think about it in terms of the tour operator has expenses to run their business.

1:45:07

So there, anyway, I'm just like, I just, I just, I'm confused. And maybe I don't, again, that's why I was kind of asking of other examples, like for people that sell cars, if there's a commission, maybe, maybe that I'm just getting too narrowly focused on a certain segment of businesses, but I'm just— it just seems from a principle, it seems straight. I just don't actually understand how they raise the price to collect the sales tax that they need to, you know, to capture that additional sales tax that they're charging. I'm— anyway, I'm still confused at how they actually don't— how they're able to legally collect and, you know, make raise the price, collect the correct amount of sales tax, and remit it without it, you know, where they're essentially paying more in sales tax than they can actually legally collect. Mr. Smith, I would suggest that you think about it in terms of the tour operator has expenses to run their business.

1:46:09

Let's just say it's whale watching. They have a boat, they've got to insure their boat, they've got to buy gasoline, they've got to pay a captain. They probably have to pay a deckhand, maybe a naturalist, and some of those have taxes associated with them. You buy gasoline, there's, there's taxes on that. One of the things an operator may choose to do in their business is hire somebody to sell their tickets.

1:46:09

Let's just say it's whale watching. They have a boat, they've got to insure their boat, they've got to buy gasoline, they've got to pay a captain, They probably have to pay a deckhand, maybe a naturalist, and some of those have taxes associated with them. You buy gasoline, there's, there's taxes on that. One of the things an operator may choose to do in their business is hire somebody to sell their tickets. And so that's a cost of doing business.

1:46:38

And so that's a cost of doing business. So when the tour operator says, hey, I want someone else to sell tickets for me, that, that cost of the ticket that's being sold by somebody else is going to account for the fact that the cost of selling that ticket is more expensive than perhaps if they didn't contract out for someone else to sell. But it may be cheaper to do that than hiring another employee to handle sales for them. So if they're looking at the cost of doing their business, the tour operator is going to say, hey, I need to charge X number of dollars for my tour, and if I'm going to, in my business model, also have an expense that is paying someone to do my sales for me, I will take into account how much I pay someone else to do my sales, and that full cost, which includes having to pay sales tax for that person to do my sales. And so I'm going to net up what it's going to cost me to run my business, and I'll set my price for my tour appropriately so I can pay for the things I need to pay for, achieve the profit that I feel like I need to achieve.

1:46:41

So when the tour operator says, hey, I want someone else to sell tickets for me, that, that cost of the ticket that's being sold by somebody else is going to account for the fact that the cost of selling that ticket is more expensive than perhaps if they didn't contract out for someone else to sell. But it may be cheaper to do that than hiring another employee to handle sales for them. So if they're looking at the cost of doing their business, the tour operator is going to say, hey, I need to charge X number of dollars for my tour, and if I'm going to, in my business model, also have an expense that is paying someone to do my sales for me, I will take into account how much I pay someone else to do my sales, and that full cost, which includes having to pay sales tax for that person to do my sales. And so I'm going to net up what it's going to cost me to run my business, and I'll set my price for my tour appropriately so I can pay for the things I need to pay for, achieve the profit that I feel like I need to achieve. And then the tour broker or the agent is going to sell the ticket for whatever they need to add on to that tour price in order to make their business model of being a tour broker work.

1:47:57

And then the tour broker or the agent is going to sell the ticket for whatever they need to add on to that tour price in order to make their business model of being a tour broker work. And so it is two very distinct transactions that are taking place. You know, anywhere that you have somebody selling on behalf— and maybe this is a terrible example, but the thing that comes to mind is realtors. If I own a home and I'm selling the home, I could go sell by owner, but I'm going to perhaps choose to hire someone to sell on my behalf. And I'm going to pay sales tax on those services.

1:48:11

And so it is two very distinct transactions that are taking place. You know, anywhere that you have somebody selling on behalf— and maybe this is a terrible example, but the thing that comes to mind is realtors. If I own a home and I'm selling the home, I could go sell by owner, but I'm going to perhaps choose to hire someone to sell on my behalf. And I'm going to pay sales tax on those services. And so when I'm figuring out what I want as my sales price, I'm going to take into account my full cost of selling.

1:48:39

And so when I'm figuring out what I want as my sales price, I'm going to take into account my full cost of selling. So I would expect a tour operator to consider their full cost of selling their tours and adjust their prices to make sure that their business model, you know, holds true to the profit that they need to maintain in order to stay in business.

1:48:48

So I would expect a tour operator to consider their full cost of selling their tours and adjust their prices to make sure that their business model, you know, holds true to the profit that they need to maintain in order to stay in business.

1:49:08

And just understand that part. I'm still confused at why on a $100 sale there's $6 of sales tax being remitted to the city. But I'll— if other people are confused, whatever, I can— I'm not there yet, but I'd be open to hearing other people's questions, or unless someone has a different explanation. But anyway, thanks. I'll yield the floor.

1:49:08

And just understand that part. I'm still confused at why on a $100 sale there's $6 of sales tax being remitted to the city. But I'll— if other people are confused, whatever, I can— I'm not there yet, but I'd be open to hearing other people's questions, or unless someone has a different explanation. But anyway, thanks. I'll yield the floor.

1:49:30

Thanks. It's be— I think maybe the confusion is you have 2 different remitters in this case, Mr. Smith, not one remitter remitting for the full sales tax. You have 2. You have the operator and the agent are both remitting to the city, and I'm getting head nods on that. I don't know if that helps.

1:49:30

Thanks. It's be— I think maybe the confusion is you have 2 different remitters in this case, Mr. Smith, not one remitter remitting for the full sales tax. You have 2. You have the operator and the agent are both remitting to the city, and I'm getting head nods on that. I don't know if that helps.

1:50:00

I have Mayor Weldon and then Mr. Brooks and then Mr. Kelly. Yeah, I— so I thought I understood it perfectly, and then I got lost again on the $6. But I get the $6, and I think that's where Mr. Smith is coming from. On a transaction, normal transaction, we'd just be collecting $5, but in this one we're collecting $6, and I don't know how internally I understand that.

1:50:00

I have Mayor Weldon and then Mr. Brooks and then Mr. Kelly. Yeah, I— so I thought I understood it perfectly, and then I got lost again on the $6. But I get the $6, and I think that's where Mr. Smith is coming from. On a transaction, normal transaction, we'd just be collecting $5, but in this one we're collecting $6, and I don't know how internally I understand that.

1:50:28

But the end result is the same $100. So, yeah, I'm not sure that I'll— I'm going to use a line from Ms. Wall. I'm not sure I'll vote for this when it gets to the assembly, but I don't see why I stay here.

1:50:28

But the end result is the same $100. So, yeah, I'm not sure that I'll— I'm going to use a line from Ms. Wall. I'm not sure I'll vote for this when it gets to the assembly, but I don't see why I stay here.

1:50:49

Sorry, my list got out of order, but I have both Mr. Brooks and Mr. Kelly. Mr. Kelly, if I got you out of order, I'm sorry. Mr. Brooks, go ahead.

1:50:49

Sorry, my list got out of order, but I have both Mr. Brooks and Mr. Kelly. Mr. Kelly, if I got you out of order, I'm sorry. Mr. Brooks, go ahead.

1:50:59

Thank you, Madam Chair. All right, time to help me understand. Uh, so the way that we currently do it is that first transaction takes place, we tax it, it goes to the agent or the second person selling it, and then they get taxed on the difference of what the first person already paid in taxes. And what we're trying to go to is the first person pays taxes when the sale happens, and then the person doing the second sale doesn't only pay taxes on the difference but the entire amount again. And that's where the understanding of the double taxation is coming through in that sense.

1:50:59

Thank you, Madam Chair. All right, time to help me understand. Uh, so the way that we currently do it is that first transaction takes place, we tax it, it goes to the agent or the second person selling it, and then they get taxed on the difference of what the first person already paid in taxes, and what we're trying to go to is the first person pays taxes when the sale happens, and then the person doing the second sale doesn't only pay taxes on the difference but the entire amount again. And that's where the understanding of the double taxation is coming through in that sense. Um, thank you, Mr. Brooks.

1:51:46

Um, thank you, Mr. Brooks. Not exactly. Maybe I'll try using numbers on this as well. So in our, in our current world, if a tourist buys a tour from a tour broker, they pay $105. The agent, the person who sold it, keeps $20 and they pass on $85 to the tour operator.

1:51:47

Not exactly. Maybe I'll try using numbers on this as well. So in our, in our current world, if a tourist buys a tour from a tour broker, they pay $105. The agent, the person who sold it, keeps $20 and they pass on $85 to the tour operator. The tour— $85, and the tour operator reports sales and the $5 of sales tax because the agent services are currently exempt from sales tax.

1:52:11

The tour— $85, and the tour operator reports sales and the $5 of sales tax because the agent services are currently exempt from sales tax.

1:52:29

If this ordinance were to go through and that exemption is repealed, the tourist still pays $105. The agent keeps $21.

1:52:29

If this ordinance were to go through and that exemption is repealed, the tourist still pays $105. The agent keeps $21.

1:52:44

They're going to pass $84 onto the operator. The operator is still going to report the full price of the tour, which would result in $5 worth of sales tax. And the agent now is going to report a sale of $20 for the service that they did in selling the tour and remit $1 worth of sales tax because they're two separate transactions, two separate businesses.

1:52:44

They're going to pass $84 onto the operator. The operator is still going to report the full price of the tour, which would result in $5 worth of sales tax. And the agent now is going to report a sale of $20 for the service that they did in selling the tour and remit $1 worth of sales tax because they're two separate transactions, two separate businesses.

1:53:15

Thank you. You know, the numbers don't necessarily do it so much for me. What's going on in my head as a business owner is that there's exemptions for resale. Why do we have those exemptions and how is this different? So there's nothing being resold here.

1:53:15

Thank you. You know, the numbers don't necessarily do it so much for me. What's going on in my head as a business owner is that there's exemptions for resale. Why do we have those exemptions and how is this different? So there's nothing being resold here.

1:53:33

The tour operator is purchasing the services of a marketer to sell their product. Can it not be argued that the tour company is selling a certain amount of tours as the product, and then the other person is reselling them? I will turn to my phone-a-friend. Uh, thank you. For the record, again, Ruth Kostek.

1:53:33

The tour operator is purchasing the services of a marketer to sell their product. Can it not be argued that the tour company is selling a certain amount of tours as the product, and then the other person is reselling them? I will turn to my phone-a-friend. Uh, thank you. For the record, again, Ruth Kostek.

1:53:57

Um, Mr. Brooks, good question. Um, we actually had this— Mayor and I had this conversation, um, with with a couple of the brokers the other day, the only way in which it would be resale would be if the broker purchased seats on the tour and resold them, but that's not what they're doing today. So today what they're doing is just saying, the operator says, hey, I've got 6 seats available. The tour broker doesn't give them money and buy those seats. They just if they have customers come up, they will sell them for the operator, but they're in— at no time does the broker currently purchase those seats directly.

1:53:57

Um, Mr. Brooks, good question. Um, we actually had this— Mayor and I had this conversation, um, with with a couple of the brokers the other day, the only way in which it would be resale would be if the broker purchased seats on the tour and resold them, but that's not what they're doing today. So today what they're doing is just saying, the operator says, hey, I've got 6 seats available. The tour broker doesn't give them money and buy those seats. They just if they have customers come up, they will sell them for the operator, but they're in— at no time does the broker currently purchase those seats directly.

1:54:43

So that if they did, if the broker said, great, I'm going to buy those 6 seats and, and resell those 6 seats, then absolutely that would be eligible for a resale of services.

1:54:43

So that if they did, if the broker said, great, I'm going to buy those 6 seats and, and resell those 6 seats, then absolutely that would be eligible for a resale of services.

1:54:57

Thank you. That helps clear it up, but it sounds like something that can be easily skirted if we pass this through. People could just change their business practices. It wouldn't require any financial cost to them, and then they'll completely avoid the purpose of what we're trying to do here, right? Um, Mr. Brooks, I don't— you know, they could absolutely choose to do that.

1:54:57

Thank you. That helps clear it up, but it sounds like something that can be easily skirted if we pass this through. People could just change their business practices. It wouldn't require any financial cost to them, and then they'll completely avoid the purpose of what we're trying to do here, right? Um, Mr. Brooks, I don't— you know, they could absolutely choose to do that.

1:55:22

The, the broker are going to— they're going to bear those costs because they're going to buy those seats and the operator doesn't necessarily have to refund them back if they don't sell them. So that's a risk that the broker would take if they were going to choose to pre-purchase seats on a tour to do or to make use of a resale exemption.

1:55:22

The, the broker are going to, they're going to bear those costs because they're going to buy those seats and the operator doesn't necessarily have to refund them back if they don't sell them. So that's a risk that the broker would take if they were going to choose to pre-purchase seats on a tour to do or to make use of a resale exemption.

1:55:51

Yes. Thank you for your grace, Madam Chair. Uh, just one more quick question. Do any of those brokers work for the cruise companies that they resell those things on?

1:55:51

Yes. Thank you for your grace, Madam Chair. Uh, just one more quick question. Do any of those brokers work for the cruise companies that they resell those things on?

1:56:03

Um, Mr. Brooks, I'm not sure, uh, of that. Um, I, I just, I don't have enough knowledge of that industry to—. No worries, thank you. Mr. Kelly. Thank you, and I might be able to answer Mr. Brooks' question because I did ask a similar question to, to Ms. Pierce.

1:56:03

Um, Mr. Brooks, I'm not sure, uh, of that. Um, I, I just, I don't have enough knowledge of that industry to—. No worries, thank you. Mr. Kelly. Thank you, and I might be able to answer Mr. Brooks' question because I did ask a similar question to, to Ms. Pierce.

1:56:23

Basically, it's the, it's the independent operators that primarily use the, the tour agents. The cruise lines usually sell their tickets directly. I think that might be an oversimplification, so probably be better to get it from Ms. Pierce. But yeah, I guess my question would be, I think Mr. Brooks brought up also that there is the whole idea of changing the model to be like a resale. And I'm actually kind of thinking, like, how can we help the independent operators?

1:56:23

Basically, it's the, it's the independent operators that primarily use the, the tour agents. The cruise lines usually sell their tickets directly. I think that might be an oversimplification, so probably be better to get it from Ms. Pierce. But yeah, I guess my question would be, I think Mr. Brooks brought up also that there is the whole idea of changing the model to be like a resale. And I'm actually kind of thinking, like, how can we help the independent operators?

1:56:53

And I'm kind of thinking of like other ways that the independent operators can do what they need to do. And would they be able to adjust their model by not paying the commission, but having the receipt, like the customer is responsible for paying the $21 plus the $1 tax and the And the, the customer is also paying for the $80 fee plus the $5 tax. Would that then still— is that something that would be permitted? Is that something that would be basically still a net of $5 income to the city?

1:56:53

And I'm kind of thinking of, like, other ways that the independent operators can do what they need to do. And would they be able to adjust their model by not paying the commission, but having the receipt, like the customer is responsible for paying the $21 plus the $1 tax and the And the, the customer is also paying for the $80 fee plus the $5 tax. Would that then still— is that something that would be permitted? Is that something that would be basically still a net of $5 income to the city?

1:57:37

Maybe that's getting too in the weeds. Um, that's an interesting question, Mr. Kelly. Um, so in essence, the tourist would be buying a tour from the tour operator and also the services of a broker separately. So the, the, the tour broker is then no longer an agent of the tour operator, they're an agent of the customer.

1:57:37

Maybe that's getting too in the weeds. Um, that's an interesting question, Mr. Kelly. Um, so in essence, the tourist would be buying a tour from the tour operator and also the services of a broker separately. So the, the, the tour broker is then no longer an agent of the tour operator, they're an agent of the customer.

1:58:13

That's kind of what I was going with. Like, it'd be just another way to record the transaction. But yeah, that is interesting. I don't, I don't know that it would really work, but we would have to think about that for a while. Thank you.

1:58:13

That's kind of what I was going with. Like, it'd be just another way to record the transaction. But yeah, that is interesting. I don't, I don't know that it would really work, but we would have to think about that for a while. Thank you.

1:58:32

Sorry to throw you a curveball.

1:58:32

Sorry to throw you a curveball.

1:58:37

I don't think I have other questions from the committee. Mayor—. Well, oh, Mr. Smith.

1:58:37

I don't think I have other questions from the committee. Mayor—. Well, oh, Mr. Smith.

1:58:51

Thank you, Madam Chair. I guess Miss, did anyone find like, why was this put in place in the first place? Was there any legislative history or minutes from when this exemption was put into place that might— I could look at to maybe like help me figure out? Anyway, did we find any like legislative history of why this was put into effect in the first place? Mr. Smith, nothing really popped out as we worked with a small group.

1:58:51

Thank you, Madam Chair. I guess Miss, did anyone find like, why was this put in place in the first place? Was there any legislative history or minutes from when this exemption was put into place that might— I could look at to maybe like help me figure out? Anyway, did we find any like legislative history of why this was put into effect in the first place? Mr. Smith, nothing really popped out as we worked with a small group.

1:59:28

That, um, Miss Wright has, um, indicated that she'll try to do some research to see if there are any notes around when this, this came into play, if there were some reasons why. And, and that would be to you before, um, June 8th, not tonight. Yep. Okay, Madam Chair, if no other questions Can I ask another one? Yes, I don't see other questions.

1:59:28

That, um, Miss Wright has, um, indicated that she'll try to do some research to see if there are any notes around when this, this came into play, if there were some reasons why. And, and that would be to you before, um, June 8th, not tonight. Yep. Okay, Madam Chair, if no other questions Can I ask another one? Yes, I don't see other questions.

2:00:00

I mean, I guess again, I'm just trying to think of other instances.

2:00:00

I mean, I guess again, I'm just trying to think of other instances.

2:00:07

I guess I'm trying to think of other instances where this type of transaction and the sales tax charged occurs. Like, do we know if an employee receives commission at a car dealership? Do we 'Cause it's just funny, it's like we don't tax income anyway. That's what, that's right. I mean, anyway, so it's like, I guess a question.

2:00:07

I guess I'm trying to think of other instances where this type of transaction and the sales tax charged occurs. Like, do we know if an employee receives commission at a car dealership? Do we 'Cause it's just funny, it's like we don't tax income anyway. That's what, that's right. I mean, anyway, so it's like, I guess a question.

2:00:33

If there's an employee of a car dealership and they get commission for selling a car, is that payment of commission taxed there? Mr. Smith, if an employee is working for its organization, It is not an independent contractor, so they are getting whatever wages they've agreed with, with their employer. Mm-hmm. Okay, thanks. I guess then, are we aware of other contractor employee— help me just find another example where it— if there's another example that's like the same as this, that would help me.

2:00:33

If there's an employee of a car dealership and they get commissioned for selling a car, is that payment of commission taxed there? Mr. Smith, if an employee is working for its organization, It is not an independent contractor, so they are getting whatever wages they've agreed with, with their employer. Mm-hmm. Okay, thanks. I guess then, are we aware of other contractor employee— help me just find another example where it— if there's another example that's like the same as this, that would help me.

2:01:19

In a different industry or whatever, if you can come up with one. Yes, again, for the record, Ruth Kostick. So one of the other exemptions that you all are considering repealing is commissions on services where commissions are the only compensation. So not the car dealership example, but for example, a multi-level marketing company like Tupperware, which is the only thing that's coming to my brain right now. Amway.

2:01:19

In a different industry or whatever, if you can come up with one. Yes, again, for the record, Ruth Kostick. So one of the other exemptions that you all are considering repealing is commissions on services where commissions are the only compensation. So not the car dealership example, but for example, a multi-level marketing company like Tupperware, which is the only thing that's coming to my brain right now. Amway.

2:02:04

So thank you. Amway. Someone sells Amway here. That representative who's making the sales in town, the only compensation they receive is a commission off of the sales that they make. Um, that exemption that is current— sorry, currently exempt.

2:02:04

So thank you. Amway. Someone sells Amway here. That representative who's making the sales in town, the only compensation they receive is a commission off of the sales that they make. Um, that exemption that is current— sorry, currently exempt.

2:02:23

Um, that is one of the other ordinances, I believe, that is up for consideration for repeal as well at the June 8th meeting.

2:02:23

Um, that is one of the other ordinances, I believe, that is up for consideration for repeal as well at the June 8th meeting.

2:02:34

And just to help me in that situation, someone sells— someone has a Tupperware party. They don't work for Amway and they sell $100 worth of Tupperware to something. They report the sale, they collect $105, they get a 20% commission, and it would just be the same situation as we're talking here. They get $20, they give $85 back to Amway, Amway pays the, you know, this, I know this is just one of the ways people remit the sales tax. And then the Amway remits the $5.

2:02:34

And just to help me in that situation, someone sells— someone has a Tupperware party. They don't work for Amway and they sell $100 worth of Tupperware to something. They report the sale, they collect $105, they get a 20% commission, and it would just be the same situation as we're talking here. They get $20, they give $85 back to Amway, Amway pays the, you know, this, I know this is just one of the ways people remit the sales tax. And then the Amway remits the $5.

2:03:17

If we do away with that, it would then be the same kind of situation we're talking here, $100 sale, but the $20 commission is subject to sales tax. And then therefore $6 is being remitted. Should that exemption be repealed in, in an ordinance? I'm seeing a lot of head nods. Yes, yes.

2:03:17

If we do away with that, it would then be the same kind of situation we're talking here, $100 sale, but the $20 commission is subject to sales tax. And then therefore $6 is being remitted. Should that exemption be repealed in, in an ordinance? I'm seeing a lot of head nods. Yes, yes.

2:03:42

Okay, thanks. Yep. Okay, thanks. Mayor Weldon, do you have a motion?

2:03:42

Okay, thanks. Yep. Okay, thanks. Mayor Weldon, do you have a motion?

2:03:58

Be helpful if I turn my mic on. I move Ordinance Number 2026-25 to the fullest sum for public hearing on June 8th. Any objections? Mr. Brooks? Don't need to speak to it.

2:03:58

Be helpful if I turn my mic on. I move Ordinance Number 2026-25 to the fullest sum for public hearing on June 8th. Any objections? Mr. Brooks? Don't need to speak to it.

2:04:19

Mr. Smith? I guess I, I guess I'm just— I, I just— it's just strange to me that on a $100 sale I get I get all the points people are talking about raising the price and that, that, whatever, but it's just weird to me that on a $100 sale they're submitting, they're remitting $6 in sales tax. And anyway, if I can get better ideas or I can hear other situations where that cascade of sales tax and change of sales tax is similar, then like I could be open to it, but I'm just— without that, I just am like, principally, it just seems, it just seems strange. But maybe I need— I can have to have more discussion, and if it, if it goes forward, all good. But, um, yeah, thanks.

2:04:19

Mr. Smith? I guess I, I guess I'm just— I, I just— it's just strange to me that on a $100 sale I get I get all the points people are talking about raising the price and that, that, whatever, but it's just weird to me that on a $100 sale they're submitting, they're remitting $6 in sales tax. And anyway, if I can get better ideas or if I can hear other situations where that cascade of sales tax and change of sales tax is similar, then like I could be open to it, but I'm just— without that, I just am like, principally, it just seems, it just seems strange. But maybe I need— I can have to have more discussion, and if it, if it goes forward, all good. But, um, yeah, thanks.

2:05:17

Mr. Kelly. Thank you. I see Ms. Wright sitting patiently in the back waiting for a question. Um, so I have one for her. Um, it's just kind of interesting, like, I think by now we probably already noticed the meeting, the June 8th meeting for next week.

2:05:17

Mr. Kelly. Thank you. I see Ms. Wright sitting patiently in the back waiting for a question. Um, so I have one for her. Um, it's just kind of interesting, like, I think by now we probably already noticed the meeting, the June 8th meeting for next week.

2:05:34

So if this motion fails and we don't refer it to the full assembly, what happens to that agenda item that's been noticed?

2:05:34

So if this motion fails and we don't refer it to the full assembly, what happens to that agenda item that's been noticed?

2:05:52

Um, thank you. For the record, this is Wright. Um, so if it failed this evening, we would pull it. I don't believe the packet is— you have a tentative agenda up at this— the packet is not published yet, so we would pull it. Um, can I ask a follow-up?

2:05:52

Um, thank you. For the record, this is Wright. Um, so if it failed this evening, we would pull it. I don't believe the packet is— you have a tentative agenda up at this— the packet is not published yet, so we would pull it. Um, can I ask a follow-up?

2:06:11

Because, because we are missing members here, Um, in theory, if it's— if the— if we— if it fails to— if we've already made the motion to move it forward and it fails to move it forward again, Because I'm like, if, if the opposite motion happened and someone said I want to pull it, that could also fail too, and then it would stay on the agenda. So am I making— am I making sense? So I think your question is, and I'm not— we have had too many meetings. I don't know when you guys actually sent it forward, but the motion was for it to be introduced on June 8th. For it to go to AFC first for discussion.

2:06:11

Because, because we are missing members here, Um, in theory, if it's— if the— if we— if it fails to— if we've already made the motion to move it forward and it fails to move it forward again, Because I'm like, if, if the opposite motion happened and someone said I want to pull it, that could also fail too, and then it would stay on the agenda. So am I making— am I making sense? So I think your question is, and I'm not— we have had too many meetings. I don't know when you guys actually sent it forward, but the motion was for it to be introduced on June 8th. For it to go to AFC first for discussion.

2:07:18

Um, so, so am I correct on that one? Yeah, I mean, we can certainly double-check that, but that, that, that would be why, um, if the motion were for it to automatically go to public hearing, then it would have to automatically go to public hearing, right? If it was exactly— so if it was going to go, um, to that You've, you normally go intro, then move it back, and then public hearing. You've, you've kind of moved it around, but you would— it would fail at this moment, and it would not be on the 8th. So, so tonight would be the decision point of whether it's moving forward for introduction or not.

2:07:18

Um, so, so am I correct on that one? Yeah, I mean, we can certainly double-check that, but that, that, that would be why, um, if the motion were for it to automatically go to public hearing, then it would have to automatically go to public hearing, right? If it was— exactly. So if it was going to go, um, to that You've, you normally go intro, then move it back, and then public hearing. You've, you've kind of moved it around, but you would— it would fail at this moment, and it would not be on the 8th.

2:07:53

So, so tonight would be the decision point of whether it's moving forward for introduction or not. And it has been introduced. This was one of the ones that was introduced at the special meeting on May 27, it was.

2:08:04

And it has been introduced. This was one of the ones that was introduced at the special meeting on May 27, it was.

2:08:19

Could I have just one, Madam Chair, to double check?

2:08:19

Could I have just one, Madam Chair, to double check?

2:08:23

Miss— no, we're taking a quick addy. Mr. Smith, can I have a point of information? How many members are in attendance right now? 8. 8.

2:08:23

Miss— no, we're taking a quick addy. Mr. Smith, can I have a point of information? How many members are in attendance right now? 8. 8.

2:08:35

So I'm just, I'm just concerned about a 4-4 vote that doesn't get us where 5 members want to get us. So we're trying to figure that out. Very good. I'll remove my objection. I may vote against it at the full assembly, but I'll remove my objection here.

2:08:35

So I'm just, I'm just concerned about a 4-4 vote that doesn't get us where 5 members want to get us. So we're trying to figure that out. Very good. I'll remove my objection. I may vote against it at the full assembly, but I'll remove my objection here.

2:08:50

Thanks.

2:08:50

Thanks.

2:09:09

Okay, so, um, it lives or dies in AFC is the answer. So, so your decision tonight, um, will, will either have it go forward or, or kill it.

2:09:09

Okay, so, um, it lives or dies in AFC is the answer. So, so your decision tonight, um, will, will either have it go forward or, or kill it.

2:09:23

Hey, thank you. That makes sense. And I would— does anyone else want to speak before I speak on this. Mr. Kelly, thank you. Um, at this moment, um, I'm feeling inclined to, to not support it.

2:09:23

Hey, thank you. That makes sense. And I would— does anyone else want to speak before I speak on this. Mr. Kelly, thank you. Um, at, at this moment, um, I, I'm feeling inclined to, to not support it.

2:09:42

Um, I, I don't feel that this is a case of double taxation. I, um, I, I agree with, um, well, yeah, I of course agree with Miss Flick's assessment, but I think what's important to me is the, the effect that this, this.

2:09:42

Um, I, I don't feel that this is a case of double taxation. I, um, I, I agree with, um, well, yeah, I of course agree with, uh, Miss Flick's, uh, assessment, but I think what's important to me is the, the effect that this, this.

2:10:00

Would have.

2:10:00

Would have.

2:10:05

And the effect I feel like it has is it disadvantages independent operators who are usually taking advantage of these, of having an intermediary sell their tours for them. And I think I would rather prioritize helping local operators. So, um, I, I think I will be inclined to vote against this when it gets to the full assembly for that reason, but I think I will allow it to get there so we can have that debate. Then I'll remove my objection. Ms. Hughes-Caniz.

2:10:05

And the effect I feel like it has is it disadvantages independent operators who are usually taking advantage of these, of having an intermediary sell their tours for them. And I think I would rather prioritize helping local operators. So, um, I, I think I will be inclined to vote against this when it gets to the full Assembly for that reason, but I think I will allow it to get there so we can have that debate. Then I'll remove my objection. Ms. Hughes-Caniz.

2:10:45

Thank you, Madam Chair. I would just speak in support of definitely moving it to the full Assembly, and then certainly you can decide whether you're going to support it there or not, but I would not Um, I appreciate Mr. Smith removing his objection, and it sounds like Mr. Kelly, you're not going to object. And then I would just say, um, 2 points, one of which is that when we talk about would this add a cost to an independent, or, you know, to a contractor who their job is selling marketing for a tour company, since that's the one we're using as an example tonight. Yes, it would add a cost. This came from the Foregone Revenue Subcommittee, um, and that's just the way that works.

2:10:45

Thank you, Madam Chair. I would just speak in support of definitely moving it to the full assembly, and then certainly you can decide whether you're going to support it there or not, but I would not Um, I appreciate Mr. Smith removing his objection, and it sounds like Mr. Kelly, you're not going to object. And then I would just say, um, 2 points, one of which is that when we talk about would this add a cost to an independent, or, you know, to a contractor who their job is selling marketing for a tour company, since that's the one we're using as an example tonight. Yes, it would add a cost. This came from the Foregone Revenue Subcommittee, um, and that's just the way that works.

2:11:31

This was looking at revenue, and, you know, you should decide each on their merits whether it's worth getting that additional revenue, revenue there. But just remind us that that was the goal of this exercise in the first place, and why we've spent time, staff time, and Assemblymember time on it. And then the second thing I would say, and I will be saying this on June 8th, is that for any exemption on our book, we've got to be able to come up with a public good and a reason for why that's either doing something for our community that, um, we either think, you know, it balances against everything else. We'd rather make somebody else pay for those costs, or we'd rather have less stuff to exempt it because we think it's that good for our community. Um, and, and so for that reason, I appreciate Mr. Smith's question about if we can find history on that.

2:11:31

This was looking at revenue, and, you know, you should decide each on their merits whether it's worth getting that additional revenue there. But just remind us that that was the goal of this exercise in the first place and why we've spent time, staff time, and Assemblymember time on it. And then the second thing I would say, and I will be saying this on June 8th, is that for any exemption on our book, we've got to be able to come up with a public good and a reason for why that's either doing something for our community that, um, we either think, you know, it balances against everything else. We'd rather make somebody else pay for those costs, or we'd rather have less stuff to exempt it because we think it's that good for our community. Um, and, and so for that reason, I appreciate Mr. Smith's question about if we can find history on that.

2:12:26

That's great, but we should really be looking at every exemption on our book. And I think, um, from our community public budget process feedback, they, you know, said that they would support finding more revenue. So for all those reasons, I'm going to support it moving forward.

2:12:26

That's great, but we should really be looking at every exemption on our book. And I think, um, from our community public budget process feedback, they, you know, said that they would support finding more revenue. So for all those reasons, I'm going to support it moving forward.

2:12:47

I, I just— I'm going to add on to Ms. Hughes-Scandies' comments just to say, you know, as someone who— I think, you know, when we make an exemption for a particular industry, we have to think about the other pieces of the industries that aren't getting that exemption, and if that's fair, and if that exemption is for the good of the public. I know I've got lots of examples of businesses that have subcontractors that have to pay— that have to charge sales tax to the operator that is then going and charging sales tax to the consumer. And I've yet to hear articulated tonight why this particular business model deserves an exemption and those don't. So, so those showing up to, to oppose this moving forward, it would be helpful for me to hear articulated what is different, um, so that I can understand. All right, um, with that, we have a motion and we have an objection.

2:12:47

I, I just— I'm going to add on to Ms. Hughes-Scandies' comments just to say, you know, as someone who— I think, you know, when we make an exemption for a particular industry, we have to think about the other pieces of the industries that aren't getting that exemption, and if that's fair, and if that exemption is for the good of the public. I know I've got lots of examples of businesses that have subcontractors that have to pay— that have to charge sales tax to the operator that is then going and charging sales tax to the consumer. And I've yet to hear articulated tonight why this particular business model deserves an exemption and those don't. So, so those showing up to, to oppose this moving forward, it would be helpful for me to hear articulated what is different, um, so that I can understand. All right, um, with that, we have a motion and we have an objection.

2:14:01

Um, Miss Wendell, will you call roll? Thank you, Chair Wall. On the motion to forward Ordinance 2026-25 to the full assembly for public hearing on June 8th, Mayor Weldon? Yes. Assemblymember Brooks?

2:14:01

Um, Miss Wendell, will you call roll? Thank you, Chair Wall. On the motion to forward Ordinance 2026-25 to the full assembly for public hearing on June 8th, Mayor Weldon? Yes. Assemblymember Brooks?

2:14:22

No. Assemblymember Smith? Yes. Assemblymember Hall? Yes.

2:14:22

No. Assemblymember Smith? Yes. Assemblymember Hall? Yes.

2:14:33

Assemblymember Atkisson? Yes. Assemblymember Hughes-Scandies? Yes. Assemblymember Kelly?

2:14:33

Assemblymember Atkinson? Yes. Assemblymember Hughes-Scandies? Yes. Assemblymember Kelly?

2:14:42

Yes. Chair Wall? Yes. The motion passes 7 ayes, 1 nay.

2:14:42

Yes. Chair Wall? Yes. The motion passes, 7 ayes, 1 nay.

2:14:52

All right, um, that brings us to 5B, um, which is probably gonna be lengthy. Um, let's take a, um, 5-minute break.

2:14:52

All right, um, that brings us to 5B, um, which is probably going to be lengthy. Um, let's take a, um, 5-minute break.

2:22:16

All right, I am gonna bring us back here.

2:22:16

All right, I am gonna bring us back here.

2:22:23

All right, um, we are coming back and we are going to be discussing, um, the ordinance amending the Uniform Sales Tax Code exemptions. If I am remembering correctly, this one is meant to be— if it current— if it follows its current trajectory, introduced, um, at the June 8th meeting. That is correct. Um, Miss, Miss Slick, is there anything you want to say on this before we, um, jump in? I have absolutely nothing to say on this.

2:22:23

All right, um, we are coming back and we are going to be discussing, um, the ordinance amending the Uniform Sales Tax Code exemptions. If I am remembering correctly, this one is meant to be— if it current— if it follows its current trajectory, introduced at the June 8th meeting. That is correct. Um, Miss, Miss Slick, is there anything you want to say on this before we, um, jump in? I have absolutely nothing to say on this.

2:23:03

All right, questions from the committee. Mr. Brooks. Thank you, Madam Chair, and pretty much just one small question. The way it's reading in here is that, you know, at least the way I'm reading it is that no exemptions except for people who have exemptions. So who, as this is written, does it apply to?

2:23:03

All right, questions from the committee. Mr. Brooks. Thank you, Madam Chair, and pretty much just one small question. The way it's reading in here is that, you know, at least the way I'm reading it is that no exemptions except for people who have exemptions. So who, as this is written, does it apply to?

2:23:31

And Mr. Brooks, I think you're— are you referring to the amend— the mayor's amendment? The, uh, ordinance as a whole. Sorry. Okay. No, no, I was just— because you were pointing at this.

2:23:31

And Mr. Brooks, I think you're— are you referring to the amend— the mayor's amendment? The, uh, ordinance as a whole. Sorry. Okay. No, no, I was just— because you were pointing at this.

2:23:49

Sorry, that was— I, I was just not following. Go, go ahead, staff. So I think I'm taking this one. This one, I will say the language is a little bit confusing, right? Because we say here are the exemptions, and then here are none of the exemptions, and then there's like 3 double negatives in this series of things.

2:23:49

Sorry, that was— I, I was just not following. Go, go ahead, staff. So I think I'm taking this one. This one, I will say the language is a little bit confusing, right? Because we say here are the exemptions, and then here are none of the exemptions, and then there's like 3 double negatives in this series of things.

2:24:09

So the way that the proposed ordinance is written, number 12 starts us off by saying, if I'm a nonprofit, anything that I, um, purchase as a nonprofit, so sales, services, and rentals that I make as a nonprofit, those are all exempt. Anything I sell as a nonprofit, none of that is exempt. So it is changing. I still get the benefit of the fact that I'm a nonprofit, but for things that I'm purchasing for my nonprofit, but nothing that I'm selling, um, is exempt. Phillip, go ahead.

2:24:09

So the way that the proposed ordinance is written, number 12 starts us off by saying, if I'm a nonprofit, anything that I, um, purchase as a nonprofit, so sales, services, and rentals that I make as a nonprofit, those are all exempt. Anything I sell as a nonprofit, none of that is exempt. So it is changing. I still get the benefit of the fact that I'm a nonprofit, but for things that I'm purchasing for my nonprofit, but nothing that I'm selling, um, is exempt. Phillip, go ahead.

2:24:47

Thank you. But then it says unless you're the city, the Indian tribes, or have a 501, which is everyone, right? Right. So it's not the 501, but, so, so the state, rural education attendance areas, federally recognized tribes, or a municipality. Are completely exempt already.

2:24:47

Thank you. But then it says unless you're the city, the Indian tribes, or have a 501, which is everyone, right? Right. So it's not the 501, but, um, so, so, um, the state, um, rural education attendance areas, federally recognized tribes, or a municipality are completely exempt already. Um, then we say the exemption does not apply to certain things because we, we want to tax those, those things.

2:25:15

Um, then we say the exemption does not apply to certain things because we, we want to tax those, those things. For example, pull tabs, we want those taxed. As a city, we have said that, um, sale services and rentals that we make at Bartlett, at Capital Transit, Parks and Rec, all of those, we want to tax those. So we We, we could remove those completely. They don't have to be there, but we've said no, we want to collect taxes on them.

2:25:23

For example, pull tabs, we want those taxed. As a city, we have said that, um, sale services and rentals that we make at Bartlett, at Capital Transit, Parks and Rec, all of those, we want to tax those. So we We, we could remove those completely. They don't have to be there, but we've said no, we want to collect taxes on them. That's appropriate.

2:25:44

That's appropriate. That's been there for a very long time.

2:25:45

That's been there for a very long time.

2:25:50

And then the major change here for Indian tribes is, is that we say things that they're selling are no longer exempt. So that's that C. And then we say— sorry, I'm just going to keep walking through— then we say things sold by a 501 and a 501, 501 are also not exempt. Things they buy are exempt, but the things that they sell are not. Okay, thank you.

2:25:50

And then the major change here for Indian tribes is, is that we say things that they're selling are no longer exempt. So that's that C. And then we say— sorry, I'm just going to keep walking through— then we say things sold by a 501 and a 501, 501 are also not exempt. Things they buy are exempt, but the things that they sell are not. Okay, thank you.

2:26:30

Other questions? I've got a question, and I'll just preview that I spent some time with Ms. Wright and Ms. Flick on this already, trying to understand how they would interpret the language as currently written, because to it— some of it feels, um, subjective. So, um, maybe the language activities primarily commercial in nature or conducted in competition with for-profit businesses. How would you— and this, whether it's Ms. Flick or Ms. Wright, answer this question— how would you go through the process of determining enforcing that, and how would you ask nonprofits to self-report that? And do you think it would be— how objective versus subjective do you think it would be?

2:26:30

Other questions? I've got a question, and I'll just preview that I spent some time with Ms. Wright and Ms. Flick on this already, trying to understand how they would interpret the language as currently written, because to it— some of it feels, um, subjective. So, um, maybe the language activities primarily commercial in nature or conducted in competition with for-profit businesses. How would you— and this, whether it's Ms. Flick or Ms. Wright, answer this question— how would you go through the process of determining enforcing that, and how would you ask nonprofits to self-report that? And do you think it would be— how objective versus subjective do you think it would be?

2:27:40

So I'll start us off. I think it's fairly subjective. That language is difficult. It's always better to have very, very clear language like So, you know, this, this, and this are exactly what we're talking about. When we look at language like this from a legal perspective and we get challenges on it, I agree this is a pinch point.

2:27:40

So I'll start us off. I think it's fairly subjective. That language is difficult. It's always better to have very, very clear language, like So, you know, this, this, and this are exactly what we're talking about. When we look at language like this from a legal perspective and we get challenges on it, I agree this is a pinch point.

2:28:02

This is a place where businesses might say we don't, we don't know what this means, or we disagree with your interpretation, finance's interpretation. What we do from a legal perspective is we look at what you talked about. So what do you mean? This is your ordinance, this is your language. So what do you mean by activities primarily commercial in nature or conducted in competition?

2:28:02

This is a place where businesses might say we don't, we don't know what this means, or we disagree with your interpretation, finance's interpretation. What we do from a legal perspective is we look at what you talked about. So what do you mean? This is your ordinance, this is your language. So what do you mean by activities primarily commercial in nature or conducted in competition?

2:28:25

We would look at that intent language. We would look for whereas clauses. There aren't any here. We can add them if you need that. And then at a second level, we would ask a department whether they have internal policies defining.

2:28:25

We would look at that intent language. We would look for whereas clauses. There aren't any here. We can add them if you need that. And then at a second level, we would ask a department whether they have internal policies defining.

2:28:38

There's a lot of language that gets defined internally, and then that guidance is put out for for nonprofits or businesses or whoever. So then I will turn to Ms. Flick to see what their process would be.

2:28:38

There's a lot of language that gets defined internally, and then that guidance is put out for for nonprofits or businesses or whoever. So then I will turn to Ms. Flick to see what their process would be.

2:28:53

Thank you. You know, we would, we would certainly look to the intent of the assembly looking through these conversations. When we look about activity, activities primarily commercial in nature, Um, you know, are, are these services or goods sold to the general public? Can anybody get them? Um, the question would be, is there somebody else who's, who's providing a similar service?

2:28:53

Thank you. You know, we would, we would certainly look to the intent of the assembly looking through these conversations. When we look about activity, activities primarily commercial in nature, Um, you know, are, are these services or goods sold to the general public? Can anybody get them? Um, the question would be, is there somebody else who's, who's providing a similar service?

2:29:24

Like, is this, is this service or this good competing with something that is for-profit? Um, but, but to Ms. Wright's point, um, where we where we can have more specificity and clear, like, these are the services that can or can't be taxed or will or won't be taxed. It certainly makes it more clear.

2:29:24

Like, is this, is this service or this good competing with something that is for-profit? Um, but, but to Ms. Wright's point, um, where we where we can have more specificity and clear, like, these are the services that can or can't be taxed or will or won't be taxed. It certainly makes it more clear.

2:29:56

Other questions?

2:30:03

Go ahead, Miss Hall. We're still on the original ordinance, correct? Okay. Yes, I think, um, maybe we, um, if we have no other questions— Mayor Weldon has brought us an amendment if you want to put that on the table and speak to it. Uh, certainly.

2:30:03

Go ahead, Miss Hall. We're still on the original ordinance, correct? Okay. Yes, I think, um, maybe we, um, if we have no other questions— Mayor Weldon has brought us an amendment if you want to put that on the table and speak to it. Uh, certainly.

2:30:23

So to do this correctly, I move ordinance 2026-XX to the full assembly and object for the purposes of amendment. Go ahead. So the reason behind this amendment is, after talking— we'll just start with number 1, and you can see a little box at the top that kind of explains it— after talking to the tribe, and what I think the intention of this body is, is to treat them as a governmental agency. So we just removed the tribe from the sales tax just as we would the other governmental agencies, state and federal. So with that, so you can see the amendment, it's only 3 pages long.

2:30:23

So to do this correctly, I move ordinance 2026-XX to the full assembly and object for the purposes of amendment. Go ahead. So the reason behind this amendment is, after talking— we'll just start with number 1, and you can see a little box at the top that kind of explains it— after talking to the tribe, and what I think the intention of this body is, is to treat them as a governmental agency. So we just removed the tribe from the sales tax just as we would the other governmental agencies, state and federal. So with that, so you can see the amendment, it's only 3 pages long.

2:31:13

And so what that does is it removes— it stops— if you look at the original memo, it stops at Page 2, number 19. 2 Things going on here. So subsection C is the tribe section, and we'll talk about the other 2 sections it removes here in a second. So first I'll say, I'll ask if there's any questions on that part of it. Any questions on that piece of what the mayor did here?

2:31:13

And so what that does is it removes— it stops. If you look at the original memo, it stops at Page 2, number 19. 2 Things going on here. So subsection C is the tribe section, and we'll talk about the other 2 sections it removes here in a second. So first I'll say, I'll ask if there's any questions on that part of it.

2:31:41

Any questions on that piece of what the mayor did here? Mr. Smith.

2:31:45

Mr. Smith.

2:31:51

Thanks, Madam Chair. I guess, Madam Mayor, your amendment essentially is like replacing the ordinance and just implementing the language that is shown on the amendment, correct? Correct. Okay, thanks. So there's two things going on with my amendment, and it was just easier to do them both at the same time.

2:31:51

Thanks, Madam Chair. I guess, Madam Mayor, your amendment essentially is like replacing the ordinance and just implementing the language that is shown on the amendment, correct? Correct. Okay, thanks. So there's 2 things going on with my amendment, and it was just easier to do them both at the same time.

2:32:12

But basically, my amendment stops the original amendment after General Douglas City Museum. So I'll speak to the second part. The second part, after discussing with some nonprofits and Ms. Wall, she was very helpful with this.

2:32:12

But basically, my amendment stops the original amendment after General Douglas City Museum. So I'll speak to the second part. The second part, after discussing with some nonprofits and Ms. Wall, she was very helpful with this.

2:32:32

We, without realizing it, were discriminating on how people or how nonprofits fundraise by exempting certain nonprofits. So, um, for instance, the Girl Scouts sell cookies for 3 months of that a year, and we were exempting them. However, some nonprofits, um, especially those with a retail space, sell— do fundraising every day of the year. So that kind of makes sense to me. So Why are we exempting some rather than others just because of the manner of their fundraising?

2:32:32

We, without realizing it, were discriminating on how people or how nonprofits fundraise by exempting certain nonprofits. So, um, for instance, the Girl Scouts sell cookies for 3 months of that a year, and we were exempting them. However, some nonprofits, um, especially those with a retail space, sell— do fundraising every day of the year. So that kind of makes sense to me. So Why are we exempting some rather than others just because of the manner of their fundraising?

2:33:13

So this creates equity and all nonprofits are going to pay sales tax regardless. And so that gets rid of— you look at the original, uh, motion or ordinance, that gets rid of Section 14 and 15. So there's no exemption, exemptions, and it gets rid of some of the subjectivity that you guys just had a discussion on. So So again, creates equity in nonprofits exemptions. All nonprofits are going to pay some kind of sales tax, and also it places tribes at equal footing as the state and federal government.

2:33:13

So this creates equity and all nonprofits are going to pay sales tax regardless. And so that gets rid of— you look at the original, uh, motion or ordinance that gets rid of Section 14 and 15. So there's no exemption, exemptions, and it gets rid of some of the subjectivity that you guys just had a discussion on. So So again, creates equity in nonprofits exemptions. All nonprofits are going to pay some kind of sales tax, and also it places tribe at equal footing as a state and federal government.

2:33:53

So that's why I'm doing that. I think it makes it similar, simpler. I think it makes it cleaner, and it gets rid of some unintentional— discrimination is a tough word— against how people, how nonprofits fundraise.

2:33:53

So that's why I'm doing that. I think it makes it similar— simpler. I think it makes it cleaner, and it gets rid of some unintentional— discrimination is a tough word— against how people, how nonprofits fundraise.

2:34:18

Objections to this motion? I'll object for a question.

2:34:18

Objections to this motion? I'll object for a question.

2:34:28

The— you did— there's a third thing you did here, which is you did, I believe, if I'm interpreting this correctly, you are exempting social services as a service from—. Thank you for that—. Sellers. Could you speak to that? Sorry, you'll also see a whereas come in.

2:34:28

The— you did— there's a third thing you did here, which is you did, I believe, if I'm interpreting this correctly, you are exempting social services as a service from—. Thank you for that—. Sellers. Could you speak to that? Sorry, you'll also see a whereas come in.

2:34:56

At the top. Thank you for that, Ms. Wall. Good thing I talked to you beforehand, um, because when we were looking at, um, sales tax, the one thing that we— I don't think the purpose of this assembly would be is to tax social services that help vulnerable, disadvantaged, or distressed individuals. For instance, this would be like Bridge Daycare or um, some of REACH's, um, working with the disabled community, or sales work with the disabled community. I don't think our intention would be to tax those services.

2:34:56

At the top. Thank you for that, Ms. Wall. Good thing I talked to you beforehand, um, because when we were looking at, um, sales tax, the one thing that we— I don't think the purpose of this assembly would be is to tax social services that help vulnerable, disadvantaged, or distressed individuals. For instance, this would be like Bridge Daycare or um, some of REACH's, um, working with the disabled community, or sales work with the disabled community. I don't think our intention would be to tax those services.

2:35:36

So we added the term on page 21. We add the term social services provided, and then we gave intent language at the top to make that clear. At the request of the Finance Department.

2:35:36

So we added the term on page 21. We add the term social services provided, and then we gave intent language at the top to make that clear. At the request of the Finance Department.

2:35:53

Mr. Kelly. Thank you. Just a question to the attorney. So the way I read this, a social service, like if we had a Venn diagram, we'd have all services and then we'd have social services would be a smaller circle that would be wholly inside of this. Larger circle.

2:35:53

Mr. Kelly. Thank you. Just a question to the attorney. So the way I read this, a social service, like if we had a Venn diagram, we'd have all services and then we'd have social services would be a smaller circle that would be wholly inside of this. Larger circle.

2:36:16

So like, is it redundant to say social services when you're already exempting services? Thank you for that question. So I'll start at the beginning. You are not exempting services made by a nonprofit or provided by a nonprofit. You— so the first part of the paragraph is sales, services, and rentals.

2:36:16

So like, is it redundant to say social services when you're already exempting services? Thank you for that question. So I'll start at the beginning. You are not exempting services made by a nonprofit or provided by a nonprofit. You— so the first part of the paragraph is sales, services, and rentals.

2:36:43

To a buyer that is a nonprofit, right? Then the second one is, or services provided by a seller that is a nonprofit. So you are right though, and we, we do have the larger services. The intent of this was to limit it to not just all services. It was going back to that public purpose concept of social services.

2:36:43

To a buyer that is a nonprofit, right? Then the second one is, or services provided by a seller that is a nonprofit. So you are right though, and we, we do have the larger services. The intent of this was to limit it to not just all services. It was going back to that public purpose concept of social services.

2:37:07

So targeting the, the provision of services for vulnerable, disadvantaged, distressed individuals in the community. Nonprofits provide many, many services. That's a very large circle. This is a smaller circle, so we designated it as social services and added the whereas clause to define that. So to kind of add to that, if I may, Ms. Wall, Um, had lots of conversations with the finance department and the attorney on this one.

2:37:07

So targeting the, the provision of services for vulnerable, disadvantaged, distressed individuals in the community. Nonprofits provide many, many services. That's a very large circle. This is a smaller circle, so we designated it as social services and added the whereas clause to define that. So to kind of add to that, if I may, Ms. Wall, Um, had lots of conversations with the finance department and the attorney on this one.

2:37:44

So, um, if Perseverance Theater sells a ticket, that's a service by a nonprofit. We're not trying to exempt the tax on that. So that's why it's social services, and that's why we define it up above. I remove my objection. Other objections?

2:37:44

So, um, if Perseverance Theater sells a ticket, that's a service by a nonprofit. We're not trying to exempt the tax on that. So that's why it's social services, and that's why we define it up above. I remove my objection. Other objections?

2:38:02

Miss Wall. Ms. Hall. Yeah, this is objection for the purpose of the question. So what would be an example of some services provided by a nonprofit serving vulnerable, disadvantaged, or distressed individuals?

2:38:02

Miss Wall. Ms. Hall. Yeah, this is objection for the purpose of the question. So what would be an example of some services provided by a nonprofit serving vulnerable, disadvantaged, or distressed individuals?

2:38:26

I'll start and you finish. Well, like I said, Bridge Daycare. REACH or, um, ORCA or any of those, um, for the disabled. And I'll go to Ms. Wright if she has more examples. Yeah, I, I think those were the examples.

2:38:26

I'll start and you finish. Well, like I said, Bridge Daycare. REACH or, um, ORCA or any of those, um, for the disabled. And I'll go to Ms. Wright if she has more examples. Yeah, I, I think those were the examples.

2:38:40

And also, again, I go back to the original question. It's your ordinance, it's your language. So part of whereas clauses and part of this discussion is for you to decide what that looks like. So if you would like a better definition of what that is, um, You could do that if you want us to bring back an ordinance later that actually says, you know, these things, you can do that. But as of right now, the discussion is, if you asked me what a social service was, it would be what the mayor has presented to you, which is, you know, Bridge, SAIL, REACH, and some of those Alaska Legal Services.

2:38:40

And also, again, I go back to the original question. It's your ordinance, it's your language. So part of whereas clauses and part of this discussion is for you to decide what that looks like. So if you would like a better definition of what that is, um, You could do that if you want us to bring back an ordinance later that actually says, you know, these things, you can do that. But as of right now, the discussion is, if you asked me what a social service was, it would be what the mayor has presented to you, which is, you know, Bridge, SAIL, REACH, and some of those Alaska Legal Services.

2:39:24

You know, like we're looking at, we're looking at, vulnerable, disadvantaged, distressed individuals and communities.

2:39:24

You know, like we're looking at, we're looking at, vulnerable, disadvantaged, distressed individuals and communities.

2:39:37

Mr. Smith. Thank you, Madam Chair. Just because the childcare piece came up, and I also feel like I don't know which of those other services would count as medical services, which I believer, already exempt from sales tax. But if.

2:39:37

Mr. Smith. Thank you, Madam Chair. Just because the childcare piece came up, and I also feel like I don't know which of those other services would count as medical services, which I believer, already exempt from sales tax. But if.

2:40:00

There was a nonprofit child care that was serving non-vulnerable, non-disadvantaged, just, you know, I don't know, I mean, middle class or lower middle class, but not, you know, distressed or whatever. With the change of this ordinance, those sales would now be subject to sales tax. Is that Is that correct?

2:40:00

There was a nonprofit child care that was serving non-vulnerable, non-disadvantaged, just, you know, I don't know, I mean, middle class or lower middle class, but not, you know, distressed or whatever. With the change of this ordinance, those sales would now be subject to sales tax. Is that Is that correct?

2:40:31

Thank you. I believe that your statement is correct. So childcare is always exempt. Medical services provided by a licensed provider are exempt. But if things fall in the middle, we would look to see whether they are serving disadvantaged, vulnerable.

2:40:31

Thank you. I believe that your statement is correct. So childcare is always exempt. Medical services provided by a licensed provider are exempt. But if things fall in the middle, we would look to see whether they are serving disadvantaged, vulnerable.

2:40:52

So for example, I think sale and reach probably fall in the middle and they don't qualify for the medical services or the, you know, the child care. Can I do a quick follow-up because I think you actually hit, you answered my question indirectly. So there is actually a child care sales tax exemption. It's not just for nonprofits. It's anyone providing, even a for-profit business providing child care.

2:40:52

So for example, I think SAIL and REACH probably fall in the middle and they don't qualify for the medical services or the, you know, the child care, obviously. Can I do a quick follow-up? Because I think you actually hit— you answered my question indirectly. So there is actually a child care sales tax exemption. It's not just for nonprofits.

2:41:13

It's anyone providing, even a for-profit business providing child care. Ms. Flick has told me that child care is exempt always. Okay, thank you. All right, I do not believe we have any, um, objections to this amendment. So seeing none, that is so moved.

2:41:18

Ms. Flick has told me that child care is exempt always. Okay, thank you. All right, I do not believe we have any objections to this amendment. So seeing none, that is so moved. It brings us back to— oh, go ahead, Mr. Smith.

2:41:38

Um, it brings us back to— oh, go ahead, Mr. Smith. Did I, did I miss you with an objection? Or are you jumping on the next one? No, I actually just forgot to lower my hand, but I actually did have another question. And now that we're there, if you're ready for it.

2:41:42

Did I, did I miss you with an objection? Or are you jumping on the next one? No, I actually just forgot to lower my hand, but I actually did have another question. And now that we're there, if you're ready for it. Yeah, let me just— I'll just clarify where we're at.

2:41:55

Yeah, let me just— I'll just clarify where we're at. So we are back at our original motion, which was to introduce this on Monday as amended by the mayor. Mr. Smith, go ahead. Thank you, Madam Chair. You actually addressed my question.

2:41:57

So we are back at our original motion, which was to introduce this on Monday as amended by the mayor. Mr. Smith, go ahead. Thank you, Madam Chair. You actually addressed my question. I was just wanted a recap and a reminder of the timing of this, but intro on Monday and then public hearing should nothing change was, you know, at the next regular.

2:42:13

I was just wanted a recap and a reminder of the timing of this, but intro on Monday and then public hearing should nothing change was, you know, at the next regular. Thank you. Any objections to the motion? Mr. Kelly, I don't think I need to speak to it yet.

2:42:24

Thank you. Any objections to the motion? Mr. Kelly, I don't think I need to speak to it yet.

2:42:36

All right, um, we— Miss Wendell, we have a, um, motion and we have objection. Will you call roll? Thank you, Chair Wall. On the motion to forward Ordinance 2026-XX, which I believe is now 2026-32, to the full assembly, um, as amended to include the amendment on packet page 149. Mayor Weldon?

2:42:36

All right, um, we— Miss Wendell, we have a, um, motion and we have objection. Will you call roll? Thank you, Chair Wall. On the motion to forward Ordinance 2026-XX, which I believe is now 2026-32, to the full assembly, um, as amended to include the amendment on packet page 149. Mayor Weldon?

2:43:08

Yes. Assemblymember Kelly? No. Assemblymember Smith? Yes.

2:43:08

Yes. Assemblymember Kelly? No. Assemblymember Smith? Yes.

2:43:20

Assemblymember Hall? Yes. I think we've got, uh, someone on Thanks. Unmuted. Miss Atkinson, maybe?

2:43:20

Assemblymember Hall? Yes. I think we've got, uh, someone on Thanks. Unmuted. Miss Atkinson, maybe.

2:43:35

Assemblymember Atkinson? Yes. Assemblymember Hughes-Scandies? Yes. Assemblymember Brooks?

2:43:35

Assemblymember Atkinson? Yes. Assemblymember Hughes-Scandies? Yes. Assemblymember Brooks?

2:43:46

Yes. Farewell? No. The motion as amended passes, 6 ayes, 2 nays. All right, that brings us to bond ordinances.

2:43:46

Yes. Farewell? No. The motion as amended passes, 6 ayes, 2 nays. All right, that brings us to bond ordinances.

2:44:02

Um, Manager Kester, do you want to— or Miss Flick, either of you want to set us up for this conversation? Sure. Um, thank you, Chair Wall. Um, in your packet you have, um, a slightly amended memo from Manager Kester that was in your May 20th packet. The only thing about this that has changed is after reviewing the— I'm gonna get the committee name wrong— Joint JSD Facilities Committee minutes.

2:44:02

Um, Manager Kester, do you want to— or Miss Flick, either of you want to set us up for this conversation? Sure. Um, thank you, Chair Wall. Um, in your packet you have, um, a slightly amended memo from Manager Kester that was in your May 20th packet. The only thing about this that has changed is after reviewing the— I'm gonna get the committee name wrong— Joint JSD Facilities Committee minutes.

2:44:39

The actual motion that moved forward was a request for a $16 million bond for schools. And, um, Mr. Maine has updated her memo on page 137 of your packet, um, to reflect, um, that, that change, um, once we, um, realized that, uh, the information you had originally needed to be updated. Um, so that has been done. The, um, I think it was at 10:59 on the 20th, uh, the assembly asked for, uh, ordinances to be drafted, um, for a $9.4 million utility, water, wastewater bond, and an up to $16 million school maintenance bond. And so those ordinances have been drafted.

2:44:39

The actual motion that moved forward was a request for a $16 million bond for schools. And, um, Mr. Maine has updated her memo on page 137 of your packet, um, to reflect, um, that, that change, um, once we, um, realized that, uh, the information you had originally needed to be updated. Um, so that has been done. The, um, I think it was at 10:59 on the 20th, uh, the assembly asked for, uh, ordinances to be drafted, um, for a $9.4 million utility, water, wastewater bond, and an up to $16 million school maintenance bond. And so those ordinances have been drafted.

2:45:30

They are included in your packet, and happy to take questions.

2:45:30

They are included in your packet, and happy to take questions.

2:45:39

Yeah.

2:45:39

Yeah.

2:45:42

Questions from the committee.

2:45:42

Questions from the committee.

2:45:48

Mr. Smith. Thank you, Madam Chair. Miss Flick, I, I feel like I wrote the answer, the answers to this question down in previous times, and sorry to put you on the spot. My recollection is that we haven't done school bonds since 2021, but that we've done water and wastewater utility bonds. We did one in 2024, and then Anyway, do you happen to have any of that history on when we've done bonds for these types of—.

2:45:48

Mr. Smith. Thank you, Madam Chair. Miss Flick, I, I feel like I wrote the answer, the answers to this question down in previous times, and sorry to put you on the spot. My recollection is that we haven't done school bonds since 2021, but that we've done water and wastewater utility bonds. We did one in 2024, and then Anyway, do you happen to have any of that history on when we've done bonds for these types of—.

2:46:23

Yes, thank you. Thank you for the question, Mr. Smith. In 2020—.

2:46:23

Yes, thank you. Thank you for the question, Mr. Smith. In 2020, '24, we did a specific— I'm sorry, um, it was issued in 2025, um, but, um, for the election '24, we did 2 bonds. One was for the public safety, um, communications and also the wastewater, um, treatment, um, facility. It was, uh, $10 million.

2:46:39

'24, We did a specific— I'm sorry, um, it was issued in 2025, um, but, um, for the election '24, we did 2 bonds. One was for the public safety, um, communications and also the wastewater, um, treatment, um, facility. It was, uh, $10 million. Um, so that was, um, approved in 2024, and the last time that I'm seeing Schools on my list is going back a really long time, like perhaps 2013. Oh, I'm getting told that's not correct.

2:46:59

Um, so that was, um, approved in 2024, and the last time that I'm seeing Schools on my list is going back a really long time, like perhaps 2013. Oh, I'm getting told that's not correct.

2:47:28

Is it 2021?

2:47:28

Is it 2021?

2:47:33

2021 School bond for— yep, sorry. In 2021, there was, um, it's just called a general obligation on my list. It's not called out for what, but that was related to schools. Thank you. Other questions, Madam Mayor?

2:47:33

2021 School bond for— yep, sorry. In 2021, there was, um, it's just called a general obligation on my list. It's not called out for what, but that was related to schools. Thank you. Other questions, Madam Mayor?

2:47:57

Speaker H

Uh, thank you. I move Ordinance, uh, 2026-XX related to the general obligation bonds for the principal amount not to exceed $9.4 million to finance water and wastewater utilities capital improvements to the full assembly.

2:47:57

Uh, thank you. I move Ordinance, uh, 2026-XX related to the general obligation bonds for the principal amount not to exceed $9.4 million to finance water and wastewater utilities capital improvements to the full assembly.

2:48:16

Objections? Mr. Smith.

2:48:16

Objections? Mr. Smith.

2:48:24

Thank you, Madam Chair. I guess I'm maybe not opposed. I feel actually opposed to probably doing it this year, not that we know that the systems don't need investment. My sense in what I've thought I've heard, and maybe we discussed, actually, I guess maybe it is somewhat addressed in the question in this memo, but Could, could the manager or someone speak to the ability of the, of the utility to actually execute this level of projects in the next, you know, few years with the $10 million bond that was done 2 years ago? Thank you, Mr. Smith, for that question.

2:48:24

Thank you, Madam Chair. I guess I'm maybe not opposed. I feel actually opposed to probably doing it this year, not that we know that the systems don't need investment. My sense in what I've thought I've heard, and maybe we discussed, actually, I guess maybe it is somewhat addressed in the question in this memo, but Could, could the manager or someone speak to the ability of the, of the utility to actually execute this level of projects in the next, you know, few years with the $10 million bond that was done 2 years ago? Thank you, Mr. Smith, for that question.

2:49:11

Manager Kester.

2:49:11

Manager Kester.

2:49:15

Kester Kester

Thank you. From a workload perspective, this $9.4 million really represents the share that would be divvied out over the next 4 years that we plan on paying for by— through sales tax dollars. So I think the answer to your question is we would manage that debt in a way to make sure that we were spending, spending those bond dollars first and only spending them when we needed them. So that very likely may mean not issuing that debt immediately. Does that help?

2:49:15

Speaker H

Thank you. From a workload perspective, this $9.4 million really represents the share that would be divvied out over the next 4 years that we plan on paying for by— through sales tax dollars. So I think the answer to your question is we would manage that debt in a way to make sure that we were spending, spending those bond dollars first and only spending them when we needed them. So that very likely may mean not issuing that debt immediately. Does that help?

2:49:51

That does. I guess just to follow up, you, you feel confident that the— yeah, that I think I understand that it's not— it's kind of replacing.

2:49:51

That does. I guess just to follow up, you, you feel confident that the— yeah, that I think I understand that it's not— it's kind of replacing.

2:50:00

Other funding. So it's not like there's now— there's not now, you know, $18.4 million, $18.8 million of projects they have to execute over the next 4 years. Yeah, I think your question is, if we approve this bond, are they really going to be able to go out and spend the $10 million that we just approved and another $9.4 million next year? And the answer is no, we would meter that work out over the next few years and manage that debt appropriately.

2:50:00

Other funding. So it's not like there's now— there's not now, you know, $18.4 million, $18.8 million of projects they have to execute over the next 4 years. Yeah, I think your question is, if we approve this bond, are they really going to be able to go out and spend the $10 million that we just approved and another $9.4 million next year? And the answer is no, we would meter that work out over the next few years and manage that debt appropriately.

2:50:38

Okay, thank you, Mr. Smith. Sorry if I missed this. Are you maintaining your objection? If no one else has any other questions, I guess I would— I have another Mr. Kelly.

2:50:38

Okay, thank you, Mr. Smith. Sorry if I missed this. Are you maintaining your objection? If no one else has any other questions, I guess I would— I have another Mr. Kelly.

2:50:57

Thank you. I guess my question would be, if we don't end up passing this, like, I guess last year we had an $8 million bond, and this year it is now a little bit higher of a bond. If we decide to postpone this for another year, are we likely to see further increments due to inflation or other reasons?

2:50:57

Thank you. I guess my question would be, if we don't end up passing this, like, I guess last year we had an $8 million bond, and this year it is now a little bit higher of a bond. If we decide to postpone this for another year, are we likely to see further increments due to inflation or other reasons?

2:51:28

All project costs increase, and inflation has been extraordinary and could continue to be extraordinary. Um, that being said, this number was, was brought to you by our consultants who did take a look at, you know, projects over time when they gave you this. This number. So, um, I, I am not saying that the need won't increase because it just seems to always increase, but the way that we got to this number cared for future year expenditures. Thank you.

2:51:28

All project costs increase, and inflation has been extraordinary and could continue to be extraordinary. That being said, this number was, was brought to you by our consultants who did take a look at projects over time when they gave you this. This number. So, um, I, I am not saying that the need won't increase because it just seems to always increase, but the way that we got to this number cared for future year expenditures. Thank you.

2:52:04

Mr. Brooks. Thank you, Madam Chair. I know there's been some light discussion on it, and I wish Director Koch was here as a phone-a-friend, but I'll pose the question. Is any of the money that would be from this or the previous one going towards efforts to address the PFAS and the byproduct at the Mendenhall Waste Center, which could result in a savings of not having to ship out the hazardous waste?

2:52:04

Mr. Brooks. Thank you, Madam Chair. I know there's been some light discussion on it, and I wish Director Koch was here as a phone-a-friend, but I'll pose the question. Is any of the money that would be from this or the previous one going towards efforts to address the PFAS and the byproduct at the Mendenhall Waste Center, which could result in a savings of not having to ship out the hazardous waste?

2:52:37

Um, to my knowledge, the only current project that we have, uh, related to PFAS is an experimental grant through the DEC revolving loan fund that is kind of looking at CBG as a test case. So we are doing that, that design work right now through, through a grant. Even better. Thank you.

2:52:37

Um, to my knowledge, the only current project that we have, uh, related to PFAS is an experimental grant through the DEC revolving loan fund that is kind of looking at CBG as a test case. So we are doing that, that design work right now through, through a grant. Even better. Thank you.

2:53:11

Mr. Smith. Thank you, Madam Chair. When, when we did the rates last year, and we, we, I don't know if committed is the right word, but we, you know, and I'm sorry, I'm looking for the numbers in here. I guess we did kind of do a commitment of this non-utility revenue. Madam Manager, is your current direction that you're going to— you would execute without further change to just use that from— like, would you include that in the 1% sales tax that the Assembly would be voting on and putting to the voters?

2:53:11

Mr. Smith. Thank you, Madam Chair. When, when we did the rates last year, and we, we, I don't know if committed is the right word, but we, you know, and I'm sorry, I'm looking for the numbers in here. I guess we did kind of do a commitment of this non-utility revenue. Madam Manager, is your current direction that you're going to— you would execute without further change to just use that from— like, would you include that in the 1% sales tax that the Assembly would be voting on and putting to the voters?

2:53:55

I believe that's next year, or, or what is your current plan of how to have had to achieve that.

2:53:55

I believe that's next year, or, or what is your current plan of how to have had to achieve that.

2:54:07

Thank you. Uh, the way we are, um, essentially subsidizing the utility with general fund dollars is through the 3% sales tax. 1% Of that is dedicated to streets and sidewalk infrastructure. And so we have carved out an appropriation. Um, for example, I think it's $1.7 million this year to do underground utility infrastructure that would otherwise be spent on just street maintenance and, um, and, and the, the plan, unless things change, would be every year to basically do a little bit less of street, a little bit less street work so that we could fund both the street and the underground utilities through sales tax.

2:54:07

Thank you. Uh, the way we are, um, essentially subsidizing the utility with general fund dollars is through the 3% sales tax. 1% Of that is dedicated to streets and sidewalk infrastructure. And so we have carved out an appropriation. Um, for example, I think it's $1.7 million this year to do underground utility infrastructure that would otherwise be spent on just street maintenance and, um, and, and the, the plan, unless things change, would be every year to basically do a little bit less of street, a little bit less street work so that we could fund both the street and the underground utilities through sales tax.

2:54:53

Not in its entirety. We would still be using some utility fund balance, but that, that would be how I interpret the direction from the rate increase. Of course, you, you guys can, you know, you, you control the CIP and can change that. But that's what I would present to you.

2:54:53

Not in its entirety. We would still be using some utility fund balance, but that, that would be how I interpret the direction from the rate increase. Of course, you, you guys can, you know, you, you control the CIP and can change that. But that's what I would present to you.

2:55:09

I have a follow-up, Madam Chair. Yes. And then I guess if we— if the assembly, as they're looking at the 1% and, you know, put forward things and have the plan, if they, they could plan out using 1% sales for water and wastewater utility improvements, and therefore at the, you know, appropriate amount, and therefore then we wouldn't be, I guess, kind of pinching from the streets.

2:55:09

I have a follow-up, Madam Chair. Yes. And then I guess if we, if the Assembly, as they're looking at the 1% and, you know, put forward things and have the plan, if they, they could plan out using 1% sales for water and wastewater utility improvements, and therefore at the, you know, appropriate amount, and therefore then we wouldn't be, I guess, kind of pinching from the streets.

2:55:42

Yeah, please. Correct. You have great discretion as to what to ask the voters for, for the 1%. Okay, but we could— yes, thanks.

2:55:42

Yeah, please. Correct, you have great discretion as to what to ask the voters for, for the 1%. Okay, but we could— yes, um, thanks. Madam Chair, I will, I will maintain my objection and would be happy to speak to it. Go ahead.

2:55:56

Madam Chair, I will, I will maintain my objection and would be happy to speak to it. Go ahead. Thank you. I guess I'm opposed to doing this year just because we're going to have the 3% on there. Who knows about other ballot initiatives from the public?

2:56:05

Thank you. I guess I'm opposed to doing this year just because we're going to have the 3% on there. Who knows about other ballot initiatives from the public? We just did a $10 million water wastewater bond. We just did increases to the rates.

2:56:18

We just did a $10 million water wastewater bond. We just did increases to the rates. And, you know, they will be increasing, I guess. I guess if we put a bond forward, my plan would be to potentially say, like, we either vote for this bond, and I'd have to actually figure out this is possible, or, you know, and maybe negate some of the rate increases or something. I guess I'm just not, I'm not at a place where I think this is the time to to make another, you know, $10 million bond for water and wastewater at this year's election.

2:56:27

And, you know, they will be increasing, I guess. I guess if we put a bond forward, my plan would be to potentially say, like, we either vote for this bond, and I'd have to actually figure out if this is possible, or, you know, and to maybe negate some of the rate increases or something. I guess I'm just not, I'm not at a place where I think this is the time to to make another, you know, $10 million bond for water and wastewater at this year's election. I know the— I know the utility needs it.

2:56:57

I know the— I know the utility needs it.

2:57:01

I could wait a year, I guess, whereas I'm much more supportive of trying to put something before the voters for schools, and I'm not sure if I'm supportive of putting $25 million of bond question in front of the voters along with the 3%. And possibly other ballot measures. So that's my objection.

2:57:01

I could wait a year, I guess, whereas I'm much more supportive of trying to put something before the voters for schools, and I'm not sure if I'm supportive of putting $25 million of bond question in front of the voters along with the 3%. And possibly other ballot measures. So that's my objection.

2:57:24

Anyone else want to speak to this? Mr. Brooks. Thank you, Madam Chair, and I, I would just speak in support of it. I appreciate what Assemblymember Smith is saying, and there's definitely a lot of you know, merit and truth in that feeling. But the way that I see it, you know, with the citizens initiatives that passed, there was an intention of that.

2:57:24

Anyone else want to speak to this? Mr. Brooks. Thank you, Madam Chair, and I, I would just speak in support of it. I appreciate what Assemblymember Smith is saying, and there's definitely a lot of you know, merit and truth in that feeling. But the way that I see it, you know, with the citizens initiatives that passed, there was an intention of that.

2:57:57

It's like, it's not that people aren't willing to spend money if it's something that they can agree that is of a great benefit to the community. And, you know, there's, there's definitely something in common between All departments, all houses, all schools, and they need good wastewater and water supplies, and it's something that we definitely need to get ahead of. And I think that that is, um, you know, although the voters aren't going to want to see a whole bunch of extra tax increases when there is decisions to be made about what to levy their taxes on. The, the wastewater utility is one that is very important. I think that people hold a good sentiment to.

2:57:57

It's like, it's not that people aren't willing to spend money if it's something that they can agree that is of a great benefit to the community. And, you know, there's, there's definitely something in common between All departments, all houses, all schools, and they need good wastewater and water supplies, and it's something that we definitely need to get ahead of. And I think that that is, um, you know, although the voters aren't going to want to see a whole bunch of extra tax increases when there is decisions to be made about what to levy their taxes on. The, the wastewater utility is one that is very important. I think that people hold a good sentiment to.

2:58:50

Miss Hughes-Candice. Thanks, Madam Chair. I'll speak just very briefly. I, I would echo Mr. Brooks' support of this. I know it's hard to balance, um, appreciate where Mr. Smith is coming from.

2:58:50

Miss Hughes-Candice. Thanks, Madam Chair. I'll speak just very briefly. I, I would echo Mr. Brooks' support of this. I know it's hard to balance, um, appreciate where Mr. Smith is coming from.

2:59:07

When we're talking about the pacing and everything. And I think I could feel that way if I felt like our rate increases were keeping up with the needs of the utility. But because for affordability reasons, we've chosen not to pursue kind of that top line number that people are telling, you know, that the math is showing that we need to. Um, then in that case, and we have to look to funding mechanisms like this, and it's just not a choice not to take care of those most basic city services, and it doesn't get more basic than water and wastewater. So I'll support this.

2:59:07

When we're talking about the pacing and everything. And I think I could feel that way if I felt like our rate increases were keeping up with the needs of the utility. But because for affordability reasons, we've chosen not to pursue kind of that top line number that people are telling, you know, that the math is showing that we need to. Um, then in that case, and we have to look to funding mechanisms like this, and it's just not a choice not to take care of those most basic city services, and it doesn't get more basic than water and wastewater. So I'll support this.

2:59:54

Anyone else? Um, I'm going to object. I, I.

2:59:54

Anyone else? Um, I'm going to object. I, I.

3:00:00

I am— if this moves forward to be introduced, you know, that's okay. I will say when we get to the ultimate vote on it, if either of the citizens' initiatives end up on the ballot, I will definitely not be in support of putting it forward. I think it's— when it— when we talk about water and wastewater, it is— I agree with what Mr. Brooks and Ms. Hughes-Candy said about the importance to our community, but it is a complex topic in terms of should we be paying for this from— by the users, and not everyone is users of our wastewater, um, by the— by sales tax or, or by bonds or by a combination of all that, that, that's complex information. And so when you mix it in with all of the other tax conversations we're having, I think it's just muddies the water a bit. So I would prefer we not move forward with this one this year, but Um, but if it does, then, then I'll fight harder to keep it off in July, depending on what happens with the citizens initiatives.

3:00:00

I am— if this moves forward to be introduced, you know, that's okay. I will say when we get to the ultimate vote on it, if either of the citizens' initiatives end up on the ballot, I will definitely not be in support of putting it forward. I think it's— when it— when we talk about water and wastewater, it is— I agree with what Mr. Brooks and Ms. Hughes-Candy said about the importance to our community, but it is a complex topic in terms of should we be paying for this from— by the users, and not everyone is users of our wastewater, um, by the— by sales tax or, or by bonds or by a combination of all that, that, that's complex information. And so when you mix it in with all of the other tax conversations we're having, I think it's just muddies the water a bit. So I would prefer we not move forward with this one this year, but Um, but if it does, then, then I'll fight harder to keep it off in July, depending on what happens with the citizens initiatives.

3:01:09

Miss Wendell, we have a motion and we have objection. Will you call roll? Thank you, Chair Wall. On the motion to forward Ordinance 2026-XX related to GO bonds in the amount of $9.4 million for water and wastewater improvements to the full assembly. Mayor Weldon?

3:01:09

Miss Wendell, we have a motion and we have objection. Will you call roll? Thank you, Chair Wall, on the motion to forward Ordinance 2026-XX related to GO bonds in the amount of $9.4 million for water and wastewater improvements to the full assembly. Mayor Weldon. Yes.

3:01:29

Yes. Assemblymember Smith? No. Assemblymember Hughes-Scandies? Yes.

3:01:31

Assemblymember Smith. No. Assemblymember Hughes-Scandies. Yes. Assemblymember Adkisson.

3:01:39

Assemblymember Adkisson? Yes. Assemblymember Kelly? Yes. Assemblymember Brooks?

3:01:40

Yes. Assemblymember Kelly. Yes. Assemblymember Brooks. Yes.

3:01:47

Yes. Assemblymember Hall? Yes. Chair Wall? No.

3:01:49

Assemblymember Hall. Yes. Chair Wall.

3:01:54

No. The motion passes 6 ayes, 2 nays.

3:01:55

The motion passes 6 ayes, 2 nays.

3:02:00

Great, that brings us to the next ordinance here. Mayor Weldon, do you want to start us with the motion? Uh, certainly. I move Ordinance 2026-XX authorizing the issuance of general obligation bonds in the principal amount not to exceed $16 million to finance capital improvements at various schools. To the full assembly, any objections?

3:02:00

Great, that brings us to the next ordinance here. Mayor Weldon, do you want to start us with the motion? Uh, certainly. I move Ordinance 2026-XX authorizing the issuance of general obligation bonds in the principal amount not to exceed $16 million to finance capital improvements at various schools. To the full assembly, any objections?

3:02:25

Mr. Brooks. Thank you, Madam Chair. Objection for, uh, I guess the, the purpose of a question. Um, very supportive of doing everything that's necessary to make sure that our schools are in the best shape and being the best facilities for people. I have one specific worry, and that's in, you know, and all the school board meetings that I've attended, there's been multiple mentions of further consolidation that might be an elementary school.

3:02:25

Mr. Brooks. Thank you, Madam Chair. Objection for, uh, I guess the, the purpose of a question. Um, very supportive of doing everything that's necessary to make sure that our schools are in the best shape and being the best facilities for people. I have one specific worry, and that's in, you know, and all the school board meetings that I've attended, there's been multiple mentions of further consolidation that might be an elementary school.

3:03:01

A lot of these projects are for elementary school type facilities, so I'm just wondering if we issued this kind of, um, bond and did a, you know, leverage the taxpayers' money for a project that could go to a facility that might then not be needed in, you know, a couple years' time, but the tax gets levied for, you know, years beyond that. Like, how would there be any way to you know, use, use funds that might have been for a school that no longer becomes a school, or if it does get spent on that facility, like, you know, does that resource and, um, staff time doing the work for that facility, does that just kind of become a wash? Like, if anyone can help me understand a little more on that, please. Um, thank you for the question, Mr. Brooks. Um, the, the language within this ordinance, and if approved going to the voters, outlines that we want to do, um, school improvements such as the things in the list, but it's not limited to the things in the list.

3:03:01

A lot of these projects are for elementary school type facilities, so I'm just wondering if we issued this kind of, um, bond and did a, you know, leverage the taxpayers' money for a project that could go to a facility that might then not be needed in, you know, a couple years' time, but the tax gets levied for, you know, years beyond that. Like, how would there be any way to you know, use, use funds that might have been for a school that no longer becomes a school, or if it does get spent on that facility, like, you know, does that resource and, um, staff time doing the work for that facility, does that just kind of become a wash? Like, if anyone can help me understand a little more on that, please. Um, thank you for the question, Mr. Brooks. Um, the, the language within this ordinance, and if approved going to the voters, outlines that we want to do, um, school improvements such as the things in the list, but it's not limited to the things in the list.

3:04:25

So if there is a school on here that by the time we're ready to do the work is no longer a school then we would have to look at the appropriateness of using these bond funds for that. But because of the way the language is written, if we decide no, that's not really good use of the bond funds, we should use the bond funds on some other school, we would have the latitude to do that. If we were to move forward, make an improvement to a school, and then all of a sudden it's not a school, um, we do have to care for regulations around how funds are spent. We would work with our bond counsel to figure out what are we going to do with this building, and is it appropriate to have used bond funds, or do we need to make some sort of remediation of some sort, and what does that look like? So we would, we would work through all of those things if that situation came to fruition.

3:04:25

So if there is a school on here that by the time we're ready to do the work is no longer a school then we would have to look at the appropriateness of using these bond funds for that. But because of the way the language is written, if we decide no, that's not really good use of the bond funds, we should use the bond funds on some other school, we would have the latitude to do that. If we were to move forward, make an improvement to a school, and then all of a sudden it's not a school, um, we do have to care for regulations around how funds are spent. We would work with our bond counsel to figure out what are we going to do with this building, and is it appropriate to have used bond funds, or do we need to make some sort of remediation of some sort, and what does that look like? So we would, we would work through all of those things if that situation came to fruition.

3:05:27

But, you know, the change of a use of a facility Um, it doesn't happen often. It does happen. Um, but I think that, you know, the, the engineering group and the joint facilities group would be judicious about, you know, picking the schools in which we utilize. I know one of the reasons why we do school bonds specifically is if the state were to actually fund their, their school bond reimbursement thing, like, we want to make sure that we've got everything in place to, to qualify for things like that. I think that if the situation arose, we could handle that.

3:05:27

But, you know, the change of a use of a facility Um, it doesn't happen often. It does happen. Um, but I think that, you know, the, the engineering group and the joint facilities group would be judicious about, you know, picking the schools in which we utilize. I know one of the reasons why we do school bonds specifically is if the state were to actually fund their, their school bond reimbursement thing, like, we want to make sure that we've got everything in place to, to qualify for things like that. I think that if the situation arose, we could handle that.

3:06:05

We'd work through the nuances, and I think part of the question would be if we already spent funds and now it's not going to be a school, just working with bond counsel on what it is. We would not extend the life of these bonds for very long. $16 Million is a lot of money, but it's really not. So, you know, we would probably have a, a 10 to 15 year payback on these bonds. So, you know, we would satisfy the need of the bonds relatively quickly.

3:06:05

We'd work through the nuances, and I think part of the question would be if we already spent funds and now it's not going to be a school, just working with bond counsel on what it is. We would not extend the life of these bonds for very long. $16 Million is a lot of money, but it's really not. So, you know, we would probably have a, a 10 to 15 year payback on these bonds. So, you know, we would satisfy the need of the bonds relatively quickly.

3:06:35

Thank you. I'll remove my objection. I'll jump off that question. Um, does— and this could be for folks in the audience from the school district or folks that were on the committee, um, the Joint Facilities Committee.

3:06:35

Thank you. I'll remove my objection. I'll jump off that question. Um, does— and this could be for folks in the audience from the school district or folks that were on the committee, um, the Joint Facilities Committee.

3:06:53

I know that the decision to close another school will be ultimately a policy decision by the school board at the time, but I also think there are, there are some assumptions in my head about which schools would be discussed, and none of them are on this list. So I guess my question is, does the school board have a kind of a prioritization matrix or something that they already know which things are more or less likely? And did the committee discuss that, um, in selecting these?

3:06:53

I know that the decision to close another school will be ultimately a policy decision by the school board at the time, but I also think there are, there are some assumptions in my head about which schools would be discussed, and none of them are on this list. So I guess my question is, does the school board have a kind of a prioritization matrix or something that they already know which things are more or less likely? And did the committee discuss that, um, in selecting these?

3:07:31

Uh, perhaps Mr. Hauser and Mr. Main would love to answer that question.

3:07:31

Uh, perhaps Mr. Hauser and Mr. Main would love to answer that question.

3:07:44

Uh, for the record, Frank Hauser, Superintendent, Juno School District. Uh, thank you for the question. Um, I, I would say right now the conversations that have happened both at the joint CBJ-JSD projects team meeting, that facility meeting, have been around the possibility of some consolidations, but really looking at that facility book that was put together in 2017 and potentially redoing that book, um, modernizing it because it is a bit out of date. Um, the district is moving forward with, um discussing the scope of what the updated version will look like. Part of that is to help inform potential future consolidations if there is a need or a desire for consolidations.

3:07:44

Uh, for the record, Frank Hauser, Superintendent, Juneau School District. Uh, thank you for the question. Um, I, I would say right now the conversations that have happened both at the joint CBJ-JSD projects team meeting, that facility meeting, have been around the possibility of some consolidations, but really looking at that facility book that was put together in 2017 and potentially redoing that book, um, modernizing it because it is a bit out of date. Um, the district is moving forward with, um discussing the scope of what the updated version will look like. Part of that is to help inform potential future consolidations if there is a need or desire for consolidations.

3:08:26

But at this time, there's not a— I mean, there's been a lot of conversations about potential school consolidations, but at the same time, um, there has been no, yes, these are the schools we're looking at. Part of the conversation, I think the focus is now identifying the scope, putting together and getting the information, which is really going to start, I would say, in earnest probably within the next fall to start looking at that overall scope and putting out an RFI or an RFP for that next phase of that document to help inform potential future consolidations or closures. Thank you for that. Any other questions from Mr. Hauser while he's up here? Ms. Hall?

3:08:26

But at this time, there's not a— I mean, there's been a lot of conversations about potential school consolidations, but at the same time, um, there has been no, yes, these are the schools we're looking at. Part of the conversation, I think the focus is now identifying the scope, putting together and getting the information, which is really going to start, I would say, in earnest probably within the next fall to start looking at that overall scope and putting out an RFI or an RFP for that next phase of that document to help inform potential future consolidations or closures. Thank you for that. Any other questions from Mr. Hauser while he's up here? Ms. Hall?

3:09:06

No, and this conversation makes me very nervous, um, knowing that post-COVID we still have so many kids that are homeschooled. And with the flat funding at the state level for so many years, I think, gosh, you know, eventually, you know, with the funding improving and families being more comfortable sending their kids back, I, I just hate to hear any consolidation conversations. That's— it's just a comment.

3:09:06

No, and this conversation makes me very nervous, um, knowing that post-COVID we still have so many kids that are homeschooled. And with the flat funding at the state level for so many years, I think, gosh, you know, eventually, you know, with the funding improving and families being more comfortable sending their kids back, I, I just hate to hear any consolidation conversations. That's— it's just a comment.

3:09:35

And I'm sorry to jump to that very weighty topic in, in my mind without acknowledging that we're not there yet and that those are weighty conversations. Anything else for Mr. Hauser? Manager Kester. Thank you. I just want to note that regardless of whether they're occupied, uh,.

3:09:35

And I'm sorry to jump to that very weighty topic in, in my mind without acknowledging that we're not there yet and that those are weighty conversations. Anything else for Mr. Hauser? Manager Kester. Thank you. I just want to note that regardless of whether they're occupied, uh,.

3:10:00

Students or not, they are the property of the City and Borough of Juneau. Thanks for that reminder, Mr. Hauser. You are relieved. Thank you for being here, at least for the moment. Um, well, relieved from duty.

3:10:00

Students or not, they are the property of the City and Borough of Juneau. Thanks for that reminder, Mr. Hauser. You are relieved. Thank you for being here, at least for the moment. Um, well, relieved from duty.

3:10:18

I don't know if you're relieved or not about the conversation. Um, we have a motion, and I do not believe we have objection. One last call. Seeing none, that is so moved.

3:10:18

I don't know if you're relieved or not about the conversation. Um, we have a motion, and I do not believe we have objection. One last call. Seeing none, that is so moved.

3:10:33

Okay, so I believe that brings us to next meeting date, which is July 8th. So we had talked about a break in our calendar here, given all the budget meetings that we have been having. Um, I sat down with the staff and calendars, and we realized that we did have some stuff we needed to talk about this summer. And so between July and August— August has traditionally fallen during gloth, um, time, and we also would like to bring our investment managers up here to talk. And so, um, we are going to move forward with a July 8th AFC, but our intent is to um, skip August to give a little bit.

3:10:33

Okay, so I believe that brings us to next meeting date, which is July 8th. So we had talked about a break in our calendar here, given all the budget meetings that we have been having. Um, I sat down with the staff and calendars, and we realized that we did have some stuff we need to talk about this summer. And so between July and August— August has traditionally fallen during gloth, um, time, and we also would like to bring our investment managers up here to talk. And so, um, we are going to move forward with a July 8th AFC, but our intent is to um, skip August to give a little bit.

3:11:20

Of. A summer break here. Um, and then that brings us to executive session. Um, Mayor Weldon, can you do that for us?

3:11:20

Of. A summer break here. Um, and then that brings us to executive session. Um, Mayor Weldon, can you do that for us?

3:11:33

Sure. Um, I move that the assembly recess in executive session to discuss an update to collective bargaining negotiations of immediate knowledge of which would adversely affect the finances of the municipality. Anyone in. The audience object to that? Anyone on the assembly object to that?

3:11:33

Sure. Um, I move that the assembly recess in executive session to discuss an update to collective bargaining negotiations of immediate knowledge of which would adversely affect the finances of the municipality. Anyone in. The audience object to that? Anyone on the assembly object to that?

3:12:01

Um, that's so moved. Can I— I didn't check in with staff on how we wanted to, to do this. Are we staying here? Do we have to do something coming out of this?

3:12:01

Um, that's so moved. Can I— I didn't check in with staff on how we wanted to, to do this. Are we staying here? Do we have to do something coming out of this?

3:12:14

Uh, can we have 2 minutes, ma'am? Yes.

3:12:14

Uh, can we have 2 minutes, ma'am? Yes.

3:13:07

Answer to tell the public what happens next here. Thank you, Madam Chair. We will not be returning into full session, and, um, we will be sending a specific Zoom link to our two members who are virtual,. And we will be staying in this room just for the— these folks.

3:13:07

Answer to tell the public what happens next here. Thank you, Madam Chair. We will not be returning into full session, and, um, we will be sending a specific Zoom link to our two members who are virtual,. And we will be staying in this room just for the— these folks.

3:13:31

Yes,.

3:13:31

Yes,.

3:13:46

We can stay in. This room. All right, with that, we are, um, in executive session. And will not be coming back. And I'll need just a moment to establish the Zoom link.

3:13:46